1. 2 Fun Sports makes downhil ski equipment. Assume that Atomic has offered to produce ski poles for Fun Sports for $22 per pair Fun Sports needs 180.000 pairs of poies per period. Fun the remaining fixed costs are unavoidable. Fun Sports currently has the following costs at a production level of 180,000 pairs of poles: Click the icon to view the table.) Should Fun Sports outsource ski pole production if the next best use of the freed capacity is to leave it idle? What effect will outsourcing haww on Fun Sports operating income? If the freed capacity could be used to produce ski boots that would provide $1,681,000 of operating income, should Fun Sports outsource ski pole production? 1. Should Fun Sports outsource ski pole production If the next best use of the freed capacity is to leave it ide? What effect will outsourcing have on Fun Sportst operating income? Begin by preparing the incremental analysis for outsourcing decision. (Use a minus sign or parentheses in the Difference column if the cost ter muito exceeds the cost to outsource.) Incremental Analysis Outsourcing Decisions Make Ski Poles Poles Difference Variable costs: Outsource Ski Plus: Fixed costs Total cost of producing 180,000 pairs of poles or Fun Sports for $22 per pair. Fun Sports needs 180,000 pairs of polos per period. Fun Sports can coby widS150,000 of feed costs it outsources: action level of 180,000 pairs of poles: is to leave it idle? What effect will outsourcing have on Fun Sports' operating income? operating income, should Fun Sports outsource ski pole production? leave it ide? What effect will outsourcing have on Fun Sports' operating income? theses in the Difference column if the cost to make exceeds the cost to outsource.) erence i Data Table Manufacturing Costs Cost per pair Total Cost (180,000 pairs) $ 1,170,000 $ 6.50 135,000 0.75 Direct Materials Direct Labor Variable MOH 5.80 1,044,000 1,206,000 6.70 Fixed MOH $ 3,555,000 $ 19.75 Total Print Done Fun Sports makes downhill ski equipment. Assume that Atomic has offered to produce ski pales for Fun Sports for $22 per pair, Fun Sports needs 180,000 pairs of poles per period. Fun the remaining ved costs are unavoidable. Fun Sports currently has the following costs at a production level of 180,000 pairs of poles: Click the icon to view the table Should Fun Sports outsourceski pole production if the next best use of the freed capacity is to leave it idle? What effect will outsourcing have on Fun Sports operating income? If the freed capacity could be used to produce ski boots that would provide $1,681,000 of operating income, should Fun Sports outsource ski pole production? 2 1. Should Fun Sporta outsource si pole production it the next best use of the freed capacity is to leave it idle? What effect wil outsourcing have on Fun Sports' operating income? Begin by preparing the incrumental analysis for cutsourcing decision. (Use a minus sign or parentheses in the Difference column if the cost to make exceeds the cost to outsource.) Outsource Ski Incremental Analysis Outsourcing Decisions Make Ski Poles Poles Difference Variable costs Plus Fixed coste Total cost of producing 180.000 pairs of poles Question Help offered to produce ski poles for Fun Sports for $22 per pair. Fun Sports noods 180,000 pairs of poles per period. Fun Sports can only avoid S150,000 of fixed costs if it outsources, the following costs at a production level of 180,000 pairs of poles: best use of the treed capacity is to leave it dle? What effect wil outsourcing have on Fun Sports operating income? at would provide $1.881,000 of operating income, should Fun Sports outsource ski pole production? use of the freed capacity is to leave tide? What affect wil outsourcing have on Fun Sports' operating income? on. (Un aminus signor parentheses in the Difference column the cost to make exceeds the cost to outsource.) Outsource Ski Pales Poles Difference
