Fun Sports makes downhill ski equipment. Assume that Atomic has offered to produce ski poles for Fun Sports for $20 per pair Fun Sports needs 110.000 pairs of poles per period. Fun Sports can only avoid $100,000 of fixed costs if it outsources, the remaining fixed costs are unavoidable. Fun Sports currently has the following costs at a production level of 110,000 pairs of poles: (Click the icon to view the table.) 1. Should Fun Sports outsourceski pole production of the next best use of the freed capacity is to leave it ide? What effect will outsourcing have on Fun Sports operating income? If the freed capacity could be used to produce ski boots that would provide $585,000 of operating income, should Fun Sports outsource ski pole production? 2. Incremental Analysis Outsourcing Decisions Variable costs Make SN Poles Outsource S Poles 2,200,000 Difference ences $ Plus: Find os Orations 693.000 Total cost of producing 110.000 pairs of poles 1. ject will outsourcing have on Should Fun Sports outsource skip Fun Sports' operating income? If the freed capacity could be used 2. Sports outsource ski pole production? $ Manufacturing Costs Direct Materials Direct Labor Variable MOH Incremental Analysis Outsourcing Decisions Variable costs: Plus: Fixed costs Total Cost 1,045,000 99,000 561,000 693,000 Cost per pair (110,000 pairs) $ 9.50 0.90 5.10 6.30 Fixed MOH $ 2,398,000 Total 21,80 Total cost of producing 110.000 pairs of