ata Table Manufacturing Costs Cost per pair Total Cost (170,000 pairs) $ 935,000 $ 5.50 Direct Materials Direct Labor 85,000 0.50 5.50 Variable MOH Fixed MOH 935,000 1,122,000 6.60 $ 3,077,000 $ 18.10 Total Print Done Safety First makes downhill ski equipment. Assume that Atomic has offered to produce ski poles for Safety First for $24 per pair. Safety First needs 170,000 pairs of poles per period. Safety First can only avoid $100,000 of fixed costs if it outsources; the remaining fixed costs are unavoidable. Safety First currently has the following costs at a production level of 170,000 pairs of poles: (Click the icon to view the table.) 1. Should Safety First outsource ski pole production if the next best use of the freed capacity is to leave it idle? What effect will outsourcing have on Safety First's operating income? If the freed capacity could be used to produce ski boots that would provide $2,195,000 of operating income, should Safety First outsource ski pole production? 2. 1. Should Safety First outsource ski pole production if the next best use of the freed capacity is to leave it idle? What effect will outsourcing have on Safety First's operating income? Begin by preparing the incremental analysis for outsourcing decision. (Use a minus sign or parentheses in the Difference column if the cost to make exceeds the cost to outsource.) Outsource Ski Poles Incremental Analysis Outsourcing Decisions Make Ski Poles Difference Variable costs: Plus: Fixed costs Total cost of producing 170,000 pairs of poles Safety First outsource production because its operating income would Enter any number in the edit fields and then continue to the next question. 0 Time Remaining: 03:58:02 Next Safety First makes downhill ski equipment. Assume that Atomic has offered to produce ski poles for Safety First for $24 per pair. Safety First needs 170,000 pairs of poles per period. Safety First can only avoid $100,000 of fixed costs if it outsources; the remaining fixed costs are unavoidable. Safety First currently has the following costs at a production level of 170,000 pairs of poles: (Click the icon to view the table.) 1. Should Safety First outsource ski pole production if the next best use of the freed capacity is to leave it idle? What effect will outsourcing have on Safety First's operating income? If the freed capacity could be used to produce ski boots that would provide $2,195,000 of operating income, should Safety First outsource ski pole production? 2. 2. If the freed capacity could be used to produce ski boots that would provide $2,195,000 of operating income, should Safety First outsource ski pole production? Begin by preparing the incremental analysis for outsourcing decision if the freed capacity could be used to produce ski boots that would provide $2,195,000 of operating income. (Complete all input fields. Enter a "0" for any zero balances. Use a minus sign or parentheses in the Difference column if the cost to make exceeds the cost to outsource.) Incremental Analysis Outsourcing Decisions Make Ski Poles Outsource Ski Poles Difference Total cost of producing 170,000 pairs of poles (from Requirement 1) Less: Income from ski boots if outsource Net cost If the freed capacity could be used to produce ski boots that would provide $2,195,000 of operating income, Safety First outsource its ski pole production because its operating income would Enter any number in the edit fields and then continue to the next question. 0 Time Remaining: 03:57:44 Next