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Mountain Fun manufactures snowboards. Its cost of making 2,100 bindings is as follows: (Click the icon to view, the costs.) Suppose Topnotch will sell bindings
Mountain Fun manufactures snowboards. Its cost of making 2,100 bindings is as follows: (Click the icon to view, the costs.) Suppose Topnotch will sell bindings to Mountain Fun for $12 each. Mountain Furn would pay 53 per unit to transport the bindings to its manufacturing plant where it would 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 Topnotch will enable the company to avoid S2,500 of fixed overhead. Prepare an analysis to show whether Mountain Fun should make or buy the bindings. (Only enter the net relevant costs. For the Difference column, use a minus sign or parentheses only when the cost of outsourcing exceeds the cost of making the bindings in-house.) Make Outsource Difference Bindings M Binding costs Bindings Data Table Variable cosis: Direct materials Direct labor ariable overhead Direct materials Direct labor Variable overhead Fixed overhead Total manufacturing costs for 2,100 bindings 17,500 3,200 2,120 6,700 $ 29,520 Fixed costs Purchase price from Topnotch Transportation Logo Total differential cost of 2,100 bindings Should Mountain Fun make or buy the bindings? Decision: Print Done Mountain Fun manufactures snowboards. Its cost of making 2,100 bindings is as follows: E(Click the icon to view the costs.) Suppose Topnotch will sell bincings to Mountain Fun for $12 each. Mountain Fun would pay $3 per unit to transport the bindings to its manufacturing plant, where it would add its own logo at a cost of $0,40 per binding. Read the requiremants. Requirement 2. The facilities freed by purchasing bindings from Topnotch can be used to manufacture another product that will oontribute S3,300 to profit. Total fixed costs will be the same as if Mountain Fun had produced the bindings. Show which alternative makes the best use of Mountain Fun's facilties. (Only enter the net relevant costs. Enter all costs as positive values. Use a minus sign or parentheses for decreases to net costs Outsource Bindings Make Facilities Make Now Bindings Idle Binding costs Product iData Table Variable Costs: Direct materials Direct labor Variable overhead Direct materials Direct labor Variable overhcad Fixed overhead Total manufacturing costs for 2,100 bindings $17,500 3,200 2,120 6,700 $29,520 Fixed costs Purchase price from Topnotch Transportation Logo Expected profit from new product Expected net cost of oblaining 2,100 bindings Print Done
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