Mountain Fun

MountainFun manufactures snowboards. Its cost of making 1 comma 890

1,890 bindings is asfollows:

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Suppose an outside supplier will sell bindings to Mountain Fun

MountainFun for $ 16

$16 each. Mountain Fun

MountainFun will pay $ 1.00

$1.00 per unit to transport the bindings to its manufacturingplant, where it will add its own logo at a cost of $ 0.40

$0.40 per binding.

Direct materials

. . . . . . . . . . . . . . . . . . . . . . . . . . .

$

18,000

Direct labor

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3,200

Variable manufacturing overhead

. . . . . . . . . . . . . .

2,340

Fixed manufacturing overhead

. . . . . . . . . . . . . . . .

6,700

Total manufacturing costs

. . . . . . . . . . . . . . . . . . . .

$

30,240

Cost per pair ($30,240 / 1,890)

. . . . . . . . . . . . . . . .

$

16.00

Requirement 1. Mountain Fun's

MountainFun's accountants predict that purchasing the bindings from the outside supplier will enable the company to avoid $ 1 comma 900

$1,900 of fixed overhead. Prepare an analysis to show whether Mountain Fun

MountainFun 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 tobuy.)

Incremental Analysis

Make

Buy (Outsource)

Outsourcing Decision

Bindings

Bindings

Difference

Variable Costs

Plus: Fixed Costs

Total cost of 1,890 bindings