Question Help Mountain Fun manufactures snowboards. Its cost of making 1,800 bindings is as follows: (Click the icon to view the costs.) Suppose Monroe will sell bindings to Mountain Fun for $15 each. Mountain Fun would pay $1 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 1. Mountain Fun's accountants predict that purchasing the bindings from Monroe will enable the company to avoid S2,100 of fixed overhead. Prepare an analysis to show whether Mountain Fun 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 Difference Binding costs Bindings (Make-Outsource) Variable costs: Direct materials Direct labor Variable overhead Fixed costs Purchase price from Monroe Transportation Logo Total differential cost of 1,800 bindings Should Mountain Fun make or buy the bindings? Decision: Question Help * Mountain Fun manufactures snowboards. Its cost of making 1,800 bindings is as follows EE (Click the icon to view the costs.) Suppose Monroe will sell bindings to Mountain Fun for $15 each. Mountain Fun would pay $1 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 reguirements. Requirement 2. The facilities freed by purchasing bindings from Monroe can be used to manufacture another product that will contribute $2,900 to profit. Total fixed costs will be the same as if Mountain Fun had produced the bindings. Show which alternative makes the best use of Mountain Fun'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 Binding costs Bindings Idle Product Variable Costs: Direct materials Direct labor Variable overhead Fixed costs Purchase price from Monroe Transportation Logo Expected profit from new product Expected net cost of obtaining 1,800 bindings Which alternative makes the best use of Mountain Fun's facilities? Data Table 1 Direct materials Direct labor Variable overhead Fixed overhead Total manufacturing costs for 1,800 bindings $17,580 2,600 2,120 6,900 $ 29,200 Print Done Requirements 1 1. Mountain Fun's accountants predict that purchasing the bindings from Monroe will enable the company to avoid $2,100 of fixed overhead. Prepare an analysis to show whether Mountain Fun should make or buy the bindings. The facilities freed by purchasing bindings from Monroe can be used to manufacture another product that will contribute $2,900 to profit. Total fixed costs will be the same as if Mountain Fun had produced the bindings. Show which alternative makes the best use of Mountain Fun's facilities: (a) make bindings, (b) buy bindings and leave facilities idle, or (c) buy bindings and make another product. 2. Print Done
