Pottery Ranch Inc. has been manufacturing its own finials for its curtain rods. The company is currently operating at 100% of capacity,and variable manufacturing overhead is charged to production at the rate of 70% of direct labor cost. The direct materials and directlabor cost per unit to make a pair of finials are $4 and $5, respectively. Normal production is 30,000 curtain rods per year.A supplier offers to make a pair of finials at a price of $12.95 per unit. If Pottery Ranch accepts the supplier's offer, all variablemanufacturing costs will be eliminated, but the $45,000 of fixed manufacturing overhead currently being charged to the finials willhave to be absorbed by other products.(a)Prepare the incremental analysis for the decision to make or buy the finials. (Enter negative amounts using either a negative signpreceding the number e.g. -45 or parentheses e.g. (45).)Direct materialsDirect laborVariable overhead costsFixed manufacturing costs$Make♫AALAABuyWP$Net IncomeIncrease (Decrease)人口/国XE Pottery Ranch Inc. has been manufacturing its own finials for its curtain rods. The company is currently operating at 100% of capacity,and variable manufacturing overhead is charged to production at the rate of 70% of direct labor cost. The direct materials and directlabor cost per unit to make a pair of finials are $4 and $5, respectively. Normal production is 30,000 curtain rods per year.A supplier offers to make a pair of finials at a price of $12.95 per unit. If Pottery Ranch accepts the supplier's offer, all variablemanufacturing costs will be eliminated, but the $45,000 of fixed manufacturing overhead currently being charged to the finials willhave to be absorbed by other products.(a)Prepare the incremental analysis for the decision to make or buy the finials. (Enter negative amounts using either a negative signpreceding the number e.g. -45 or parentheses e.g. (45).)Direct materialsDirect laborVariable overhead costsFixed manufacturing costs$Make♫AALAABuyWP$Net IncomeIncrease (Decrease)人口/国XE

Incremental Analysis:-Meaning:-Decisions involves a choice amoung alternative actions.Process used…

Answered: Pottery Ranch Inc. has been…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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