Outdoor Life manufactures snowboards. Its cost of making 1,700 bindings is as follows: (Click the icon to view the costs.) Suppose Livingston will well bindings to Outdoor Life for $13 each. Outdoor Life would pay $2 per unit to transport the bindings to its manufacturing plant, where it would add its own logo at a cost of $0.70 per binding. ( Requirement 1. Outdoor Lile's accountants predict that purchasing the bindings from Livingston will enable the company to avoid $2,500 of fixed overhead. Prepare an analysis to show whether Outdoor Life should make or buy the bindinge. (Only enter the net relevant costs. For the Difference column, use a minus sign or parentheses only when the cost of outsourcing exceeds the cost of maiding the bindings in-house.) Binding costs Variable costs Direct materials Direct labor Variable overhead Fixed costs Purchase price from Livingston Transportation Logo Total differential cost of 1,700 bindings Should Outdoor Life make or buy the bindings? Decision: Make Bindings Outsource Bindings Difference (Make-Outsource) Data table Direct materials $ 17,540 Direct labor 2,500 Variable overhead 2.100 8,700 Fixed overhead 28.940 Total manufacturing costs for 1,700 bindings Print Done - x Requirement 2. The facilities freed by purchasing bindings from Livingston can be used to manufacture another product that will contribute $3,500 to profit. Total fixed costs will be the same as if Outdoor Life had produced the bindings. Show which alternative makes the best use of Outdoor Life's facilities. (Only enter the not relevant costs. Enter all costs as positive values. Use a minus sign or parentheses for decreases to net costs.) Binding costs Variable Costs Direct materials Direct labor Outsource Bindings Make Bindings Facilities Make New Idle Product Variable overhead Fixed costs Purchase price from Livingston Transportation Logo Expected profit from new product Expected net cost of obtaining 1,700 bindings Which alternative makes the best use of Outdoor Life's facilites? Decision Requirements 1. Outdoor Life's accountants predict that purchasing the bindings from Livingston will enable the compeny to avoid $2,500 of fixed overhead. Prepare an analysis to show whether Outdoor Life should make or buy the bindings. 2. The facilities freed by purchasing bindings from Livingston can be used to manufacture another product that will contribute $3,000 to profit. Total fixed costs will be the same as if Outdoor Life had produced the bindings. Show which alternative makes the best use of Outdoor Life's facilities (a) make bindings, (b) buy bindings and leave facilities idle, or (c) buy bindings and make another product. Print Done