Cool Boards manufactures snowboards. Its cost of making 1,900 bindings is as follows: (Click the icon to view the costs.) Suppose Lancaster will sell bindings to Cool Boards for $12 each. Cool Boards would pay $2 per unit to transport the bindings to its manufacturing plant, where it would add its own logo at a cost of $0.50 per binding. Read the requirements Requirement 1. Cool Boards' accountants predict that purchasing the bindings from Lancaster will enable the company to avoid $2,000 of fixed overhead. Prepare an analysis to show whether Cool Boards 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 Outsource Difference Binding costs Bindings Bindings (Make-Outsource) Variable costs: Direct materials 17,560 17,560 Direct labor 2,900 2,900 Variable overhead 2,060 2,060 Fixed costs 2,000 2,000 Purchase price from Lancaster $ 22,800 (22,800) Transportation 3,800 (3,800) Logo 950 (950) Total differential cost of 1,900 bindings $ 24,320 24,520 $ 2 27,550 $ 1300 (3,030) Should Cool Boards make or buy the bindings? Decision: Make the bindings. Requirement 2. The facilities freed by purchasing bindings from Lancaster can be used to manufacture another product that will contribute $3,400 to profit. Total fixed costs will be the same best use of Cool Boards' facilities. (Only enter the net relevant costs. Enter all costs as positive values. Use a minus sign or parentheses for decreases to net costs.) Outsource Bindings Make Facilities Make New Binding costs Bindings Idle Product Variable Costs: Direct materials 17,560 Direct labor 2,900 Variable overhead 2,060 Fixed costs Purchase price from Lancaster $ 22,800 22,800 Transportation 3,800 3,800 Logo 950 950 Expected profit from new product (3,400) Expected net cost of obtaining 1,900 bindings $ Direct materials Direct labor Variable overhead 17,560 2,900 2,060 6,400 Fixed overhead Total manufacturing costs for 1,900 bindings $ 28,920