Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Mountain Sports manufactures snowboards. Its cost of making 10.000 bindings is as follows: Click the icon to view the costs.) Suppose an outside supplier will

image text in transcribed
image text in transcribed
image text in transcribed
Mountain Sports manufactures snowboards. Its cost of making 10.000 bindings is as follows: Click the icon to view the costs.) Suppose an outside supplier will sell bindings to Mountain Sports for $11 each. Mountain Sports will pay $3,00 per unit to transport the bindings to its manufacturing plant, where it wil add its own logo at a cost of $0.20 per binding, Read the requirements 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 show whether Mountain Sports should make or buy the bindings. (Enter a "O" for any zero balances. Round any per unit amounts to the nearest cont 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 Make Buy (Outsource) Outsourcing Decision Bindings Bindings Difference Variable Costs Plus: Fixed Costs Total cost of 19,000 bindings bind Sunt - i Data Table Direct materials. $ 22,000 edict mak enthel to ava hounts 81,000 Direct labor... Variable manufacturing overhead ake 44,000 81,000 adings Fixed manufacturing overhead.. 147 $ 228,000 81 Total manufacturing costs.. Cost per pair ($228,000 / 19,000) $ 12.00 228 Print Done i Requirements 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 show whether Mountain Sports 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 $3,100 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's facilities: (a) make bindings, (b) buy bindings and leave facilities idle, or (c) buy bindings and make another product

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Complete Handbook Of Operational And Management Auditing

Authors: William T. Thornhill

1st Edition

0131611410, 978-0131611412

More Books

Students also viewed these Accounting questions