Outdoor Life manufactures snowboards. Its cost of making 2,100 bindings is as follows: (Click the icon to view the costs.) Suppose Lancaster will sell bindings to Outdoor Life for $16 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 $0.70 per binding. Read the requirements Requirement Outdoor Life's accountants predict that purchasing the bindings from Lancaster will enable the company to avoid $1,800 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 Outsource Difference Bindings Bindings (Make-Outsource) Data table Binding costs Variable costs: : Direct materials Direct labor S 17,590 Variable overhead Direct materials Direct labor Variable overhead 3,100 2,030 6,500 Fixed overhead Fixed costs Purchase price from Lancaster Transportation Logo $ 29,220 Total manufacturing costs for 2,100 bindings Total differential cost of 2,100 bindings Should Outdoor Life make or buy the bindings? Print Done Decision: Requirement 2. The facilities freed by purchasing bindings from Lancaster can be used to manufacture another product that will contribute $2,700 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 net relevant costs. Enter all costs as positive values. Use a minus sign or parentheses for decreases to net costs.) Lile manuactures Snowboards. Its Cost of making 2,00 Odings is as follows: . Click the icon to view the costs.) Suppose Lancaster will sell bindings to Outdoor Life for $16 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 $0.70 per binding. Read the requirements Decision: Requirem bindings. Buy the bindings. Irchasing bindings from Lancaster can be used to manufacture another product that will contribute $2,700 to profit. Total fixed costs will be the same as if Outdoor Life had produced the he best use of Outdoor Life's facilities. (Only enter the net relevant costs. Enter all costs as positive values. Use a minus sign or parentheses for decreases to net costs.) Outsource Bindings Make Facilities Make New Data table Bindings Idle Product Make the bindings. Variable Casts: Direct materials $ 17,590 Direct labor 3,100 Direct materials Direct labor Variable overhead Fixed overhead Total manufacturing costs for 2,100 bindings Variable overhead Fixed costs Purchase price from Lancaster Transportation 2,030 6,500 $ 29,220 Logo Expected profit from new product Print Done 1 Expected net cost of obtaining 2,100 bindings Which alternative makes the best use of Outdoor Life's facilities? Outdoor Life manufactures snowboards. Its cost of making 2,100 bindings is as follows: (Click the icon to view the costs.) Suppose Lancaster will sell bindings to Outdoor Life for $16 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 S0.70 per binding, Read the requirements. Requirement 2. The facilities freed by purchasing bindings from Lancaster can be used to manufacture another product that will contribute $2,700 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 net relevant costs. Enter all costs as positive values. Use a minus sign or parentheses for decreases to net costs.) Data table Direct materials S Outsource Bindings Make Facilities Make New Binding costs Bindings Idle Product Variable Costs: Direct materials Direct labor Variable overhead Fixed costs Purchase Transport Logo Buy the binding and leave the facilities idle. Expected Buy the binding and use the facilities to make the other product. Expected Make the bindings Which alte 17,590 3,100 Direct labor Variable overhead 2.030 6,500 Fixed overhead S 29.220 Total manufacturing costs for 2,100 bindings Print Done Decision
