Requirements - X 1. Wild Ride's accountants predict that purchasing the bindings from Hemingway will enable the company to avoid $1,800 of fixed overhead. Prepare an analysis to show whether Wild Ride should make or buy the bindings. 2. The facilities freed by purchasing bindings from Hemingway can be used to manufacture another product that will contribute $3,000 to profit. Total fixed costs will be the same as if Wild Ride had produced the bindings. Show which alternative makes the best use of Wild Ride's facilities: (a) make bindings. (b) buy bindings and leave facilities idle, or (c) buy bindings and make another product. Print Done Data Table - X Direct materials Direct labor Variable overhead 17.530 3,500 2,100 7.000 30,130 Fixed overhead $ Total manufacturing costs for 1.800 bindings Print Done Wild Ride manufactures snowboards. Its cost of making 1,800 bindings is as follows: Click the icon to view the costs.) Suppose Hemingway will sell bindings to Wild Ride for $16 each. Wild Ride would pay $2 per unit to transport the bindings to its manufacturing plant, where it would add its own logo at a cost of $0.70 per binding. Read the requirements. Requirement 1. Wild Ride's accountants predict that purchasing the bindings from Hemingway will enable the company to avoid $1,800 of fixed overhead. Prepare an analysis to show whether Wild Ride 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 (MakeOutsource) Binding costs Variable costs: Direct materials Direct labor Variable overhead Fixed costs Purchase price from Hemingway Transportation Logo Total differential cost of 1,800 bindings Requirement 1. Wild Ride's accountants predict that purchasing the bindings from Hemingway will enable the company to avoid $1.800 of fixed overhead. Prepare an analysis to show whether Wild Ride 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 17.530 3,500 2.100 Fixed costs 1.800 17.530 3,500 2.100 1,800 (28,800) (3,600) (1,280) (8,730) $ Purchase price from Hemingway Transportation 28,800 3,800 1,280 33,680's Logo Total differential cost of 1,800 bindings $ 24.8 24.930's Should Wild Ride make or buy the bindings? Decision: Make the bindings. Requirement 2. The facilities freed by purchasing bindings from Hemingway can be used to manufacture another product that will contribute $3,000 to profit. Total fixed costs will be the same as if Wild Ride had produced the bindings. Show which alternative makes the best use of Wild Ride's facilities. (Only Enter any number in the edit fields and then click Check Answer. Requirement 2. The facilities freed by purchasing bindings from Hemingway can be used to manufacture another product that will contribute $3,000 to profit. Total fixed costs will be the same as if Wild Ride had produced the bindings. Show which alternative makes the best use of Wild Ride'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 Product Binding costs Bindings Idle Variable Costs: Direct materials Direct labor Variable overhead Fixed costs Purchase price from Hemingway Transportation Logo Expected profit from new product Expected net cost of obtaining 1,800 bindings