Requirement 2. The facilities freed by purchasing bindings from Topnotch can be used to manufacture another product that will contribute $2,600 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.)
Mountain Fun manufactures snowboards. Its cost of making 2,000 bindings is as follows: (Click the icon to view the costs.) Suppose Topnotch will sell bindings to Mountain Fun for $16 each. Mountain Fun would pay $2 per unit to transport the bindings to its manufacturing plant, where it would add its own logo at a cost of $0.40 per binding. Read the requirements. Decision: Make the bindings. Requirement 2. The facilities freed by purchasing bindings from Topnotch can be used to rrianufacture another product that will contribute $2,600 to profit. Total fixed costs will be the same as if Mountain Fur had produced the bindings. Show which alternative makes the best use of Mountain Fun's facilities. (Only enter the nel relevant costs. Enter all costs as positive values. Use a minus sign or parentheses for decreases lo nel costs.) Make Bindings Outsource Bindings Facilities Make New idle Product Binding costs Variable Costs: Direct materials Direct labor Variable overhead Fixed costs Purchase price from Topnotch Transportation Logo Expected profit from new product Expected net cost of obtaining 2.000 bindings Enter any number in the edit fields and then click Check Answer. 1 part remaining Clear All Check Answer Mountain Fun manufactures snowboards. Its cost of making 2,000 bindings is as follows: (Click the icon to view the costs.) Suppose Topnotch will sell bindings to Mountain Fun for $16 mach. Mountain Fun would pay $2 per unit to transport the bindings to its manufacturing plant, where it would add its own logo at a cost of $0.40 por binding. Read the requirements, Requirement 1. Mountain Fun's accountants predict that purchasing the bindings from Topnotch will enable the company to avoid 52,500 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 Bindings Difference (Make-Outsource) Binding costs Variable costs: Direct materials Direct labor Variable overhead 17,520 3,500 2,090 2,500 17.520 3.500 2,090 2.500 (32,000) Fixed costs Purchase price from Topnotch Transportation S 32.000 1,000' (4,000) 800 Logo (800) (11,190) $ 25,610 S Total differential cost of 2,000 bindings 36.800'S Should Mountain Fun make or buy the bindings? Decision: Make the bindings. Enter any number in the edit fields and then click Check Answer. part remaining Clear All Check Answer Data Table A Requirements Direct materials Direct labor 17,520 3,500 2,090 7,100 Variable overhead 1. Mountain Fun's accountants predict that purchasing the bindings from Topnotch will enable the company to avoid $2,500 of fixed overhead. Prepare an analysis to show whether Mountain Fun should make or buy the bindings. 2. The facilities freed by purchasing bindings from Topnotch can be used to manufacture another product that will contribute $2,600 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. Fixed overhead $ 30,210 Total manufacturing costs for 2,000 bindings Print Done Print Print Done Done
