Question
Mountain Fun manufactures snowboards. Its cost of making 19,000 bindings is as follows: (Click the icon to view the costs.) Suppose an outside supplier
Mountain Fun manufactures snowboards. Its cost of making 19,000 bindings is as follows: (Click the icon to view the costs.) Suppose an outside supplier will sell bindings to Mountain Fun for $12 each. Mountain Fun will pay $2.00 per unit to transport the bindings to its manufacturing plant, where it will add its own logo at a cost of $0.40 per binding. Read the requirements. Requirement 1. Mountain Fun's accountants predict that purchasing the bindings from the outside supplier will enable the company to avoid $2,300 of fixed overhead. Prepare an analysis to show whether the company should make or buy the bindings. (Enter a "0" for any zero balances. Round any per unit amounts to the nearest cent and your final answers to the nearest whole dollar. Use a minus sign or parentheses in the Difference column when the cost to make exceeds the cost to buy.) Incremental Analysis Make Buy (Outsource) Outsourcing Decision Bindings Bindings Difference Variable Costs Plus: Fixed Costs Total cost of 19,000 bindings Decision:
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