Mountain sports manfuctures snowboards. Its cost 1890 of making bindings is as follows:

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

Suppose an outside supplier will sell bindings to Mountain Sportsfor $17 each. Mountain sportswill pay $2.00 per unit to transport to the bindings to its manfucturing plant , where it will add its own logo at a cost of $ 0.60 per binding.

Requirments:

1.Mountain sports accountants predict that purchasing the bindings from the outside supplier will enable the company to avoid $2000 of fixed overhead. Prepare an analysis to show whether the company should make or buy the bindings.

2.The facilities freed by purchasing bindings from the outside supplier can be used to manufacture another product that will contribute$3000 to profit. Total fixed costs will be the same as if mountain sports had produced the bindings. Show which alternative makes the best use of Mountain sports facilities: (a) make bindings, (b) buy bindings and leave facilities idle, or (c) buy bindings and make another product.

Requirement 1. Mountain Sports' accountants predict that purchasing the bindings from the outside supplier will enable the company to avoid $2,000 of fixed overhead. Prepare an analysis to shov 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.) Decision: Requirement 2. The facilities freed by purchasing bindings from the outside supplier can be used to manufacture another product that will contribute $3,000 to profit. Total fixed costs will be the same as if Mountain Sports had produced the bindings. Show which alternative makes the best use of Mountain Sports' facilities: (a) make bindings, (b) buy bindings and leave facilities idle, or (c) buy bindings and make another product. (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.)