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Diamond makes downhill ski equipment. Assume that Atomic has offered to produce ski poles for Diamond for $24 per pair. Diamond needs 200,000 pairs of

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Diamond makes downhill ski equipment. Assume that Atomic has offered to produce ski poles for Diamond for $24 per pair. Diamond needs 200,000 pairs of poles per period. Diamond can only avoid $110,000 of fored costs if it outsources; the remaining fixed costs are unavoidable. Diamond currently has the following costs at a production level of 200,000 pairs of poles: (Click the icon to view the table) 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? 2. If the freed capacity could be used to produce ski boots that would provide $1,940,000 of operating income. should Diamond outsource ski pole production? Data table

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