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Mountain Rides manufactures snowboards. Its cost of making 1,850 bindings is as follows: (Click the icon to view the costs.) Suppose an outside supplier will
Mountain Rides manufactures snowboards. Its cost of making 1,850 bindings is as follows: (Click the icon to view the costs.) Suppose an outside supplier will sell bindings to Mountain Rides for $14 each. Mountain Rides 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 Rides' accountants predict that purchasing the bindings from the outside supplier will enable the company to avoid $2,200 of fixed overhead. Prepare an analysis to show whether Mountain Rides should make or buy the bindings (Enter a-o 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 Outsourcing Decision Make Buy (Outsource) Bindings Bindings Difference Data Table Variable Costs Plus: Fixed Costs Total cost of 1,850 bindings Direct materials Direct labor Variable manufacturing overhead. Fixed manufacturing overhead Total manufacturing costs Cost per pair ($29,785/1,850) S 18,500 2,900 1,285 7,100 S 29,785 $ 16.10
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