question

data table

requirements

requirement 1

decision 1

requirement 2

decision 2

Krass Snowboard Mfg. Inc. manufactures snowboards. Its cost of making 1,800 bindings is as follows: (Click the icon to view the costs.) Suppose O'Brien will sell bindings to Krass for $14 each. Krass will pay $1.00 per unit to transport the bindings to its manufacturing plant, where it will add its own logo at a cost of $0.20 per binding. Requirements Costs x $ Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead Total manufacturing costs Cost per pair ($29,500 / 1.800) 17,520 3,100 2,080 6,800 29,500 $ $ 16.39 i Requirements X 1. Krass's accountants predict that purchasing the bindings from O'Brien will enable the company to avoid $3.200 of fixed overhead. Prepare an analysis to show whether Krass should make or buy the bindings. 2. The facilities freed by purchasing bindings from O'Brien can be used to manufacture another product that will contribute $3,100 to profit. Total fixed costs will be the same as if Krass had produced the bindings. Show which alternative makes the best use of Krass's facilities: (a) make bindings. (b) buy bindings and leave facilities idle, or (c) buy bindings and make another product. Requirement 1. Krass's accountants predict that purchasing the bindings from O'Brien will enable the company to avoid $3,200 of fixed overhead. Prepare an analysis to show whether Krass should make or buy the bindings. (If a box is not used in the table, leave the box empty; do not enter a zero. Use a minus sign or parentheses for subtracting numbers that are typically shown enclosed in parentheses in an outsourcing analysis. All boxes in the Cost to Make Minus the Cost to Buy column should have a value entored.) Krass Snowboard Mfg.Inc. Outsourcing Analysis Make Buy Binding Bindings Cost to Make Minus Cost to Buy Total cost: Direct materials Direct labour Variable overhead Fixed overhead Purchase price from O'Brien Transportation Logo Total cost of 1,800 bindings Decision: Decision: Requirem bindings, Outsourci Buy the bindings Make the bindings Do nothing Requirement 2. The facilities freed by purchasing bindings from O'Brien can be used to manufacture another product that will contribute $3,100 to profit. Total fixed costs will be the same as if Krass had produced the bindings. Show which alternative makes the best use of Krass's facilities: (a) make bindings. (b) buy bindings and leave facilities idio, or (c) buy bindings and make another product. (If a box is not used in the table, leave the box ompty; do not onter a zero. Use a minus sign or parentheses for subtracting numbers that are typically shown enclosed in parentheses in an outsourcing analysis.) Krass Snowboard Mfg. Ltd. Best Use of Facilities Analysis Make Bindings Buy Bindings Leave Make Another Facilities Idio Product Direct materials Direct labour Variable overhead Fixed overhead Purchase price from O'Brien Transportation Logo Expected profit from other product Expected not cost Decision: mase sporti Buy the bindings and leave the facilities idle. Buy the bindings and use the facilities to make another product Continue to make the bindings Do nothing cted cted ion