Diamond makes downhill ski equipment. Assume that Atomic has offered to produce ski poles for Diamond for $17 per pair. Diamond needs 160,000 pairs of poles per period. Diamond can only avoid $130,000 of fixed costs if it outsources; the remaining fixed costs are unavoidable. Diamond currently has the following costs at a production level of 160,000 pairs of poles: (Click the icon to view the table.) 1. 2. Should Diamond outsource ski pole production if the next best use of the freed capacity is to leave it idle? What effect will outsourcing have on Diamond's operating income? If the freed capacity could be used to produce ski boots that would provide $406,000 of operating income, should Diamond outsource ski pole production? 1. Should Diamond outsource ski pole production if the next best use of the freed capacity is to leave it idle? What effect will outsourcing have on Diamond'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 Skl Incremental Analysis Outsourcing Decisions Make Ski Poles Poles Difference Variable costs: Plus: Fixed costs Total cost of producing 160,000 pairs of poles Data table Manufacturing Costs Direct Materials Total Cost $ 1,360,000 $ Cost per pair (160,000 pairs) 8.50 Direct Labor 144,000 0.90 Variable MOH Fixed MOH 880,000 1,040,000 5.50 6.50 $ 3,424,000 $ 21.40 Total Print Done - X