Requirement 1.

Winter Sports'Winter Sports'

accountants predict that purchasing the bindings from

LivingstonLivingston

will enable the company to avoid

$ 2 comma 500$2,500

of fixed overhead. Prepare an analysis to show whether

Winter SportsWinter Sports

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
Binding costs	Bindings	Bindings	(MakeOutsource)
Variable costs:
Direct materials
Direct labor
Variable overhead
Fixed costs
Purchase price from Livingston
Transportation
Logo
Total differential cost of 1,800 bindings

Should

Winter SportsWinter Sports

make or buy the bindings?Decision:

Buy the bindings.

Make the bindings.

Requirement 2. The facilities freed by purchasing bindings from

LivingstonLivingston

can be used to manufacture another product that will contribute

$ 2 comma 800$2,800

to profit. Total fixed costs will be the same as if

Winter SportsWinter Sports

had produced the bindings. Show which alternative makes the best use of

Winter Sports'Winter Sports'

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 Livingston
Transportation
Logo
Expected profit from new product
Expected net cost of obtaining 1,800 bindings

Which alternative makes the best use of

Winter Sports'Winter Sports'

facilities?Decision:

Buy the binding and leave the facilities idle.

Buy the binding and use the facilities to make the other product.

Make the bindings.

Enter any number in the edit fields and then continue to the next question.

Winter Sports manufactures snowboards. Its cost of making 1,800 bindings is as follows: E Click the icon to view the costs.) Suppose Livingston will sell bindings to Winter Sports for $16 each. Winter Sports would pay $1 per unit to transport the bindings to its manufacturing plant, where it would add its own logo at a cost of $0.50 per binding. Read the requirements. Requirement 1. Winter Sports' accountants predict that purchasing the bindings from Livingston will enable the company to avoid $2,500 of fixed overhead. Prepare an analysis to show whether Winter Sports 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 Binding costs Bindings Bindings (Make-Outsource) Variable costs: Direct materials Direct labor Variable overhead Enter any number in the edit fields and then continue to the next question. ? Direct materials $ 17,500 Direct labor 2,900 Variable overhead 2,040 6,500 Fixed overhead $ 28,940 Total manufacturing costs for 1,800 bindings Ked mir 1. Winter Sports' accountants predict that purchasing the bindings from Livingston will enable the company to avoid $2,500 of fixed overhead. Prepare an analysis to show whether Winter Sports should make or buy the bindings. 2. The facilities freed by purchasing bindings from Livingston can be used to manufacture another product that will contribute $2,800 to profit. Total fixed costs will be the same as if Winter Sports had produced the bindings. Show which alternative makes the best use of Winter Sports' facilities: (a) make bindings, (b) buy bindings and leave facilities idle, or (c) buy bindings and make another product. Make Outsource Difference Binding costs Bindings Bindings (Make-Outsource) Variable costs: Direct materials Direct labor Variable overhead Fixed costs Purchase price from Livingston Transnortation Fixed costs Purchase price from Livingston Transportation Logo Total differential cost of 1,800 bindings Should Winter Sports make or buy the bindings? Decision: Requirement 2. The facilities freed by purchasing bindings from Livingston can be used to manufacture another product that will contribute $2,800 to profit. Total fixed costs will be the same as if Winter Sports had produced the bindings. Show which alternative makes the best use of Winter Sports' 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 Enter any number in the edit fields and then continue to the next question. ? Make Facilities Make New Binding costs Bindings Idle Product Variable Costs: Direct materials Direct labor Variable overhead Fixed costs Purchase price from Livingston Transportation Enter any number in the edit fields and then continue to the next question. Direct lapor Variable overhead Fixed costs Purchase price from Livingston Transportation Logo Expected profit from new product Expected net cost of obtaining 1,800 bindings Which alternative makes the best use of Winter Snorte' facilities? Enter any number in the edit fields and then continue to the next question. Which alternative makes the best use of Winter Sports' facilities? Decision: Enter any number in the edit fields and then continue to the next