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Outdoor Life manufactures snowboards. Its cost of making 2,000 bindings is as follows: (Click the icon to view the costs.) Suppose Lancaster will sell bindings
Outdoor Life manufactures snowboards. Its cost of making 2,000 bindings is as follows: (Click the icon to view the costs.) Suppose Lancaster will sell bindings to Outdoor Life for $12 each. Outdoor Life would pay $3 per unit to transport the bindings to its manufacturing plant, where it would add its own logo at a cost of $0.40 per binding. Read the requirements. Requirement 1. Outdoor Life's accountants predict that purchasing the bindings from Lancaster will enable the company to avoid $1,900 of fixed overhead. Prepare an analysis to show whether Outdoor Life should make or buy the bindings. (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 making the bindings in-house.) Make Bindings Outsource Bindings Difference (Make-Outsource) 0 Data Table - X Binding costs Variable costs: Direct materials Direct materials $ Direct labor Direct labor Variable overhead 17,560 3,200 2,120 6,600 Variable overhead Fixed costs Purchase price from Lancaster Fixed overhead $ 29,480 Transportation Total manufacturing costs for 2,000 bindings Logo Print Done Total differential cost of 2,000 bindings
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