Wild Ride manufactures snowboards. Its cost of making 2,000 bindings is as follows:

Direct materials	$17,510
Direct labor	3,000
Variable overhead	2,120
Fixed overhead	7,000
Total manufacturing costs for 2,000 bindings	$29,630

Suppose Lewis will sell bindings to Wild Ride for $14 each. Wild Ride would pay $3 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.

Part 1 Requirement 1. Wild Ride's accountants predict that purchasing the bindings from Lewis will enable the company to avoid $2,500 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	Outsource	Difference
Binding costs	Bindings	Bindings	(MakeOutsource)
Variable costs:
Direct materials
Direct labor
Variable overhead
Fixed costs
Purchase price from Lewis
Transportation
Logo
Total differential cost of 2,000 bindings

Requirements:

1.	Wild Ride's accountants predict that purchasing the bindings from Lewis will enable the company to avoid $2,500 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 Lewis can be used to manufacture another product that will contribute $2,700 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.