1 X Costs Direct materials Direct labour. Variable manufacturing overhead Fixed manufacturing overhead. Total manufacturing costs Cost per pair (529,030 / 1,800) 17,220 3,300 2,010 6,500 29,030 $ $ 16.13 Print Done Requirements 1. Wild Ride's accountants predict that purchasing the bindings from Otter will enable the company to avoid $3,200 of fixed overhead. Prepare an analysis to show whether Wild Ride should make or buy the bindings. 2. The facilities freed by purchasing bindings from Otter can be used to manufacture another product that will contribute $2,800 to profit . Total fixed costs will be the same as if Wild Ride had produced the bindings. Show which alternative makes the best use of Wild Ride's facilities: (a) make bindings, (b) buy bindings and leave facilities idle, or (c) buy bindings and make another product. Print Done Wild Ride Snowboard Mfg. Inc. manufactures snowboards. Its cost of making 1,800 bindings is as follows: E: (Click the icon to view the costs.) Suppose Otter will sell bindings to Wild Ride for $15 each. Wild Ride will pay $3.00 per unit to transport the bindings to its manufacturing plant, where it will add its own logo at a cost of $0.20 per binding. Requirements Requirement 1. Wild Ride's accountants predict that purchasing the bindings from Otter will enable the company to avoid $3,200 of fixed overhead. Prepare an analysis to show whether Wild Ride should make or buy the bindings. (If a box is not used in the table, leave the box empty; do not enter a zero. Use a minus sign or parentheses for subtracting numbers that are typically shown enclosed in parentheses in an outsourcing analysis. All boxes in the Cost to Make Minus the Cost to Buy column should have a value entered.) Wild Ride Snowboard Mfg. Inc. Outsourcing Analysis Make Buy Binding Bindings Cost to Make Minus Cost to Buy Total cost: Direct materials Direct labour Variable overhead Fixed overhead Purchase price from Otter Transportation Logo Total cost of 1,800 bindings Decision Requirement 2. The facilities freed by purchasing bindings from Otter can be used to manufacture another product that will contribute $2,800 to profit. Total fixed costs will be the same as if Wild Ride had produced the bindings. Show which alternative makes the best use of Wild Ride's facilities: (a) make bindings, (b) buy bindings and leave facilities idle, or (c) buy bindings and make another product. (If a box is not used in the table, leave the box empty; do not enter a zero. Use a minus sign or parentheses for subtracting numbers that are typically shown enclosed in parentheses in an outsourcing analysis.) Wild Ride Snowboard Mfg. Ltd. Best Use of Facilities Analysis Make Buy Bindings Leave Make Another Facilities Idle Product Bindings Direct materials Direct labour Variable overhead Fixed overhead Purchase price from Otter Transportation Logo Expected profit from other product Expected net cost Decision
