Requirement 4

Snowshoes R Us makes snowshoes. It currently produces 2,100 pairs of snowshoes per year. its cost of making the bindings that are part of the snowshoes are as follows: Direct materials Direct labor Variable overhead Fixed overhead 17,530 2,900 2,110 6.800 Total cost for 2,100 bindings 29340 $ 12. Showshoes has an offer from Better Bindings to sell bindings to Shoeshoes for Snowshoes would pay $ 1.00 per unit to transport the bindings to its manufacturing plant, where it would add its own logo at a cost of $ 0.40 per logo Requirement 1: Snowshoes R Us accountants predict that purchasing the bindings from Better Bindings will enable the company to avoid $ 2,500 in fixed overhead. Prepare an analysis to show whether Snowshoes R Us should make or buy the bindings. Requirement 2: The facilities freed by purchasing bindings from Better Bindings can be used to manufacture another product that will contribute $ 2,700 to profit. Total fixed costs will be the same as if Snowshoes RUS had produced the bindings. Show which alternative makes the best use of Snowshoes facilities. Requirement 3: The Snowshoes demand has risen to the extent that Shoeshoes can sell all the product it produces. Snowshoes investors desire to earn a 12% return on their combined investment of $ 404,250 What price per pair should Shoeshoes set to achieve this return? Following are the costs to produce 2,100 pairs of Snowshoes: 52,000 Direct materials Direct labor Variable overhead Fixed overhead 26,600 15,200 15,200 Total cost for 2.100 pairs of shoes 109.000 Requirement 4 Remembering that showshoes can sell all the showshoes it produces, it desires to make maximum use of its production facilities Snowshoes also makes a boogie board. The boogie boards have a maximum demand of 10,000 units One machine makes both the boogie boards and showshoes. The machine has a maximum capacity of 30,000 machine hours per year. The contribution margin of the boogie board is per unit. The snowshoe takes 2 hours of machine time to produce the boogie board takes 1 hours to produce. Assume that showshoes has been charging a price of $ 60,00 per pair of showshoes. 6.25 How many of each product should be produced with the capacity of the machine