Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Outdoor Sports manufactures snowboards. Its cost of making 26,200 bindings is as follows: Direct materials: $21,000 Direct labor: $86,000 Variable manufacturing overhead: $42,000 Fixed manufacturing

image text in transcribedimage text in transcribed

Outdoor Sports manufactures snowboards. Its cost of making 26,200 bindings is as follows:

Direct materials: $21,000

Direct labor: $86,000

Variable manufacturing overhead: $42,000

Fixed manufacturing overhead: $86,400

Total manufacturing costs: $235,800

Cost per pair ($235,800/26200): $9.00

Suppose an outside supplier will sell bindings to Outdoor Sports for $15 each. Outdoor Sports will pay $2.00 per unit to transport the bindings to its manufacturing plant, where it will add its own logo at a cost of $0.50 per binding.

1) Outdoor Sports' accountants predict that purchasing the bindings from the outside supplier will enable the company to avoid $2,100 of fixed overhead. Prepare an analysis to show whether Outdoor Sports should make or buy the bindings.

Decision:

(a) Buy the buildings?

(b) Make the buildings?

(Enter a "0" for any zero balances. Round any per unit amounts to the nearest cent 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.)

image text in transcribedimage text in transcribed

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

Horngrens Cost Accounting A Managerial Emphasis

Authors: Srikant M. Datar, Madhav V. Rajan, Louis Beaubien

8th Canadian Edition

134453735, 9780134824680, 134824687, 9780134733081 , 978-0134453736

More Books

Students also viewed these Accounting questions