ER 8 P8-52A Outsourci (Learning Objective 6) s decision given alternative use of capacity Mountain Sports manufactures snowboards. Its cost of making 1,850 bindings is as follows Direct materia. Direct labor Variable manufacturing overhead.... Fixed manufacturing overhead. Total manufacturing costs $18,500 2,900 1,285 7,100 $ 29.785 $ 16.10 Cost per pair ($29,785 1,850) Suppose an outside supplier will sell bindings to Mountain Sports for $14 eac tain Sports will pay $1.00 per unit to transport the bindings to its manufacturing plant, where it will add its own logo at a cost of $0.70 per binding. Requirements 1. Mountain Sports' accountants predict that purchasing the bindings from the outside supplier will enable the company to avoid $2,000 of fixed overhead. Prepare an analy- sis to show whether the company should make or buy the bindings. The facilities freed by purchasing bindings from the outside supplier can be used to manufacture another product that will contribute $2,800 to profit. Total fixed costs will be the same as if Mountain Sports had produced the bindings. Show which al- ternative makes the best use of Mountain Sports facilities: (a) make bindings, (b) buy bindings and leave facilities idle, or (c) buy bindings and make another product. 2