West End Boards (WEB) makes 500 high-end snowboards each year and incurs the following costs:

Direct materials $40,000

Direct labor 60,000

Variable manufacturing overhead 14,000

Fixed manufacturing overhead 36,000

Total $150,000

East Coast Boards (ECB) has offered to sell a similar high quality snowboard to WEB for $280 each. For WEB, the fixed manufacturing overhead consists mainly of depreciation on the equipment used to manufacture the boards and would not be reduced if the boards were purchased from ECB.

A)Use Incremental Analysis to determine if WEB should make or buy the snowboards?

B)Repeat part (a) assuming WEB can avoid $20,000 in fixed costs per year if they outsourced. Also, if outsourced, WEB has the opportunity to use the shop equipment to produce ski blades which is estimated to have a contribution margin of $26,000 per year.