Data table Manufacturing Costs Direct Materials Direct Labor Variable MOH Fixed MOH Total Cost per pair (100,000 pairs) Total Cost $ 750,000 $ 80,000 520,000 650,000 $ 2,000,000 $ 7.50 0.80 5.20 6.50 20.00 Rossignol makes downhill ski equipment. Assume that Atomic has offered to produce ski poles for Rossignol for $18 per pair. Rossignol needs 100,000 pairs of poles per period. Rossignol can only avoid $125,000 of fixed costs if it outsources; the remaining fixed costs are unavoidable. Rossignol currently has the following costs at a production level of 100,000 pairs of poles: (Click the icon to view the table.) 1. Should Rossignol outsource ski pole production if the next best use of the freed capacity is to leave it idle? What effect will outsourcing have on Rossignol's operating income? If the freed capacity could be used to produce ski boots that would provide $500,000 of operating income, should Rossignol outsource ski pole production? 2. 1. Should Rossignol outsource ski pole production if the next best use of the freed capacity is to leave it idle? What effect will outsourcing have on Rossignol'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 Variable costs: Plus: Fixed costs Total cost of producing 100,000 pairs of poles Make Ski Poles Difference Based on our calculations, the total cost of outsourcing the ski poles and leaving the freed capacity idle is production because its operating income would than the cost to produce the poles in-house. Thus, Rossignol 2. If the freed capacity could be used to produce ski boots that would provide $500,000 of operating income, should Rossignol 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 $500,000 of operating income. (C 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.) M-I-- OL! should outsource should not Rossignol makes downhill ski equipment. Assume that Atomic has offered to produce ski poles for Rossignol for $18 per pair. Rossignol needs 100,000 pairs of poles per period. Rossignol can only avoid Variable costs: Plus: Fixed costs Total cost of producing 100,000 pairs of poles Based on our calculations, the total cost of outsourcing the ski poles and leaving the freed capacity idle is production because its operating income would 2. If the freed capacity could be used to produce Begin by preparing the incremental analysis for Enter a "0" for any zero balances. Use a minus decline by $325,000. Incremental Analysis Outsour increase by $325,000. Total cost of producing 100,000 pairs of poles (from Requirement 1) Less: Income from ski boots if outsource Net cost Make Ski Poles than the cost to produce the poles in-house. Thus, Rossignol ,000 of operating income, should Rossignol outsource ski pole production? pacity could be used to produce ski boots that would provide $500,000 of operating income. (Complete all input fields. ce column if the cost to make exceeds the cost to outsource.) Outsource Ski Poles Difference outsource If the freed capacity could be used to produce ski boots that would provide $500,000 of operating income, Rossignol outsource its ski pole production because its operating income would Rossignol makes downhill ski equipment. Assume that Atomic has offered to produce ski poles for Rossignol for $18 per pair. Rossignol needs 100,000 pairs of poles per period. Rossignol can only avoid Variable costs: Plus: Fixed costs Total cost of producing 100,000 pairs of poles Based on our calculations, the total cost of outsourcing the ski poles and leaving the freed capacity idle is production because its operating income would 2. If the freed capacity could be used to produce ski boots that would provide $500,000 of operating income, should Rossignol outsource ski pole production? decline by $175,000 decline by $325,000. increase by $175,000 increase by $325,000. ysis Outsourcing Decisions pairs of poles (from Requirement 1) I analysis for outsourcing decision if the freed capacity could be used to produce ski boots that would provide $500,000 of operating income. (Complete all input fields. Use a minus sign or parentheses in the Difference column if the cost to make exceeds the cost to outsource.) utsource than the cost to produce the poles in-house. Thus, Rossignol Make Ski Poles Outsource Ski Poles Difference outsource to produce ski boots that would provide $500,000 of operating income, Rossignol outsource its ski pole production because its operating income would