Mountaineer Snowboard Mfg. Inc. manufactures snowboards. Its cost of making 2,200 bindings is as follows: B (Click the icon to view the costs.) Suppose O'Brien will sell bindings to Mountaineer for $8 each. Mountaineer 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 $0.60 per binding. Requirements Requirement 1. Mountaineer's accountants predict that purchasing the bindings from O'Brien will enable the company to avoid $3,500 of fixed overhead. Prepare an analysis to show whether Mountaineer should make or buy the bindings. (If a box is not used in the table, leave the box empty; do not enter a zero. Use a minus sign or parentheses for subtracting numbers that are typically shown enclosed in parentheses in an outsourcing analysis. All boxes in the Cost to Make Minus the Cost to Buy column should have a value entered.) * Costs Mountaineer Snowboard Mfg. Inc. - X Outsourcing Analysis Make Buy Bindings Cost to Make Minus Cost to Buy .......$ Binding Direct materials ............ Direct labour. ........ Total cost: 17,210 3,400 2,070 6,500 Variable manufacturing overhead ......... Direct materials Fixed manufacturing overhead ............. Direct labour $ 29,180 Variable overhead Total manufacturing costs.... Fixed overhead 13.26 Cost per pair ($29,180 / 2,200) $ Purchase price from O'Brien Transportation Print Done Logo Total cost of 2,200 bindings i Requirements - X 1. Mountaineer's accountants predict that purchasing the bindings from O'Brien will enable the company to avoid $3,500 of fixed overhead. Prepare an analysis to show whether Mountaineer should make or buy the bindings. 2. The facilities freed by purchasing bindings from O'Brien can be used to manufacture another product that will contribute $3,300 to profit. Total fixed costs will be the same as if Mountaineer had produced the bindings. Show which alternative makes the best use of Mountaineer's facilities: (a) make bindings, (b) buy bindings and leave facilities idle, or (c) buy bindings and make another product. Print Done Mountaineer Snowboard Mfg. Inc. manufactures snowboards. Its cost of making 2,200 bindings is as follows: E (Click the icon to view the costs.) Suppose O'Brien will sell bindings to Mountaineer for $8 each. Mountaineer 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 $0.60 per binding. Requirements Requirement 2. The facilities freed by purchasing bindings from O'Brien can be used to manufacture another product that will contribute $3,300 to profit. Total fixed costs will be the same as if Mountaineer had produced the bindings. Show which alternativ makes the best use of Mountaineer's facilities: (a) make bindings, (b) buy bindings and leave facilities idle, or (c) buy bindings and make another product. (lf a box is not used in the table, leave the box empty; do not enter a zero. Use a minus sign or parentheses for subtracting numbers that are typically shown enclosed in parentheses in an outsourcing analysis Mountaineer Snowboard Mfg. Ltd. Costs Best Use of Facilities Analysis - X Make Buy Bindings Leave Make Another Facilities Idle Product Direct materials ........ Direct labour............ Variable manufacturing overhead. Bindings 17,210 3,400 2,070 6.500 Direct materials Fixed manufacturing overhead .... Direct labour 29,180 Variable overhead Total manufacturing costs Cost per pair ($29,180 / 2,200). $ 13.26 Fixed overhead Purchase price from O'Brien Transportation Print Done Logo Expected profit from other product
