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Mountain Fun manufactures snowboards. Its cost of making 23,600 bindings is as follows: (Click the icon to view the costs.) Suppose an outside supplier will
Mountain Fun manufactures snowboards. Its cost of making 23,600 bindings is as follows: (Click the icon to view the costs.) Suppose an outside supplier will sell bindings to Mountain Fun for $13 each. Mountain Fun 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. 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 Mountain Fun 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 the Difference column when the cost to make exceeds the cost in to buy.) Make Buy (outsource) Incremental Analysis Bindings Outsourcing Decision Bindings Difference Variable Costs Plus xed Costs Total cost of 23,600 bindings Requirement 2. The facilities freed by purchasing bindings from the outside supplier can be used to manufacture another product that will contribute $2,900 to profi 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'ss facilities: (a) make bindings, (b) buy bindings and leave facilities idle, or (C) buy bindings and make another product. (Enter a TO" for any zero balances, Round any per unit amounts to the nearest cent and your final answers to the nearest whole dollar.) Buy (Outsource) Bindings (b) Leave (c) Make Incremental Analysis (a) Make Binding outsourcing Decision Faci es Idle Another Product Variable Costs Plus: Fixed Costs Total cost of 23,600 bindings Less: Profit from another product Net cost Decision
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