Total overhead {xed and variable) Total cost Direct materials 30 80 Minnetonka has approached a subcontractor to discuss the possibility of purchasing the bindings. The purchase price of the bindings from the subcontractor would be 5.25 per binding. or 10.50 per pair. If the Minnetonka Corporation accepts the purchase proposal, it is predicted that direct-labor and variable-overhead costs would be reduced by 10% and direct-materials costs would be reduced by 20%. 1. Should the Minnetonka Corporation make or buy the bindings? Show calculations to support your answer. 2. What would be the maximum purchase price acceptable to the Minnetonka Corporation for the bindings? Support your answer with an appropriate explanation. 3. Instead of sales of 10.000 pairs of skis. revised estimates show sales volume at 12.500 pairs. At this new volume, additional equipment, at an annual rental of 10,000. must be acquired to manufacture the bindings. This incremental cost would be the only additional fixed cost required. even if sales increased to 30.000 pairs. (1' he 30.000 level is the goal for the third year of production.) Under these circumstances. should the Minnetonka Corporation make or buy the bindings? Show calculations to support your answer. 4. The company has the option of making and buying at the same time. What would be your answer to number 3 if this alternative were considered? Show calculations to support your