Answer:
The Preparation an incremental analysis is below:-
No, Pottery ranch should not buy because incremental cost of $58,094
Explanation:
The Preparation an incremental analysis is below:-
Make Buy Net income Income
/Decrease
Direct material $101,920 $101,920
($3.92 × 26,000)
Direct Labor $120,640 $120,640
($4.64 × 26,000)
Variable manufacturing $65,146 $65,146
($120,640 × 0.54)
Fixed manufacturing $46,700 $46,700
Purchase price $345,800 ($345,800)
($13.30 × 26,000)
Total cost $334,406 $392,500 ($58,094)
No, Pottery ranch should not buy because incremental cost of $58,094