QUESTION 2 North Corp manufactures snowboards. During the most recent year 2019, North produced 5,000 snowboards, with top layer, base layer and bindings. The variable manufacturing cost per snowboard is $220. The following costs apply to the bindings only (left and right foot), per unit: Direct Materials S 70 Direct Labour S 50 Variable MOH S 20 Total fixed costs per year are $120,000. Sales volume is expected to remain constant. Southeast Inc can sell bindings to North Corp for $175 per unit, where 'one unit' is the left and right foot bindings for one snowboard. If North Corp accepts Southeast's offer, there would be an additional $5 per unit cost for North to add company logos. As well, if North accepts the outsourcing offer, $40,000 fixed costs per year would be saved, due to the partly idle factory. a) Determine whether North Corp should accept Southeast's offer to provide bindings. b) Now assume that with idle factory capacity, North Corp could produce ski mitts. Expected sales would be 1500 units at $55 price. Variable costs to produce the mitts: $15 per unit. If North Corp makes and sells the mitts, the fixed costs savings would be only $22,000 ($98,000 fixed cost per year)