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0 Data Table - X Direct materials $ Direct labor Variable overhead Fixed overhead 17,500 3,000 2.110 8,600 29,300 $ Total manufacturing costs for 1.700
0 Data Table - X Direct materials $ Direct labor Variable overhead Fixed overhead 17,500 3,000 2.110 8,600 29,300 $ Total manufacturing costs for 1.700 bindings Print Done Requirements 2. Outdoor Life's accountants predict that purchasing the bindings from Lewis will enable the company to avoid $1,000 of fixed overhead. Prepare an analysis to show whether Outdoor Life should make or buy the bindings The facilities freed by purchasing bindings from Lewis can be used to manufacture another product that will contribute $2,600 to profit. Total fixed costs will be the same as if Outdoor Life had produced the bindings. Show which alternative makes the best use of Outdoor Life's facilities: (a) make bindings. (b) buy bindings and leave facilities idle, or (c) buy bindings and make another product Print Done Outdoor Life manufactures snowboards. Its cost of making 1.700 bindings is as follows: (Click the icon to view the costs.) Suppose Lewis will sell bindings to Outdoor Life for $15 each. Outdoor Life would pay $3 per unit to transport the bindings to its manufacturing plant, where it would add its own logo at a cost of $0.40 per binding. Read the requirements Requirement 1. Outdoor Life's accountants predict that purchasing the bindings from Lewis will enable the company to avoid $1.900 of fixed overhead. Prepare an analysis to show whether Outdoor Life should make or buy the bindings. (Only enter the net relevant costs. For the Difference column, use a minus sign or parentheses only when the cost of outsourcing exceeds the cost of making the bindings in-house.) Make Bindings Outsource Bindings Difference (Make-Outsource) Binding costs Variable costs: Direct materials Direct labor Variable overhead Fixed costs Purchase price from Lewis Transportation Logo Total differential cost of 1,700 bindings
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