Winter Fun makes downhil ski equipment. Assume that Atomic has offered to produce ski poles for Winter Fun for $23 per pair: Winter Pun reeds 120,000 pairs of polos per period. Winter Fun can only avoid $40.000 et fand costs outsources, the remaining fixed costs are unavoidable. Winter Fun currently has the following costs of a production level of 120.000 pairs of poles (Click the icon to view the table) Should Winter Fun outsource ski pole production if the next best use of the freed capacity is to leave it de? What affect wil outsourcing have on Winter Fur's operating income? 2 of the freed capacity could be used to produce ski boots that would provide $894,000 of operating income, should Winter Fun outsource ski pole production? 1. 1. Should Winter Fun outsource ski pole production if the next best use of the freed capacity is to leave ide? What effect will outsourcing have on Winter Puri's operating income? Begin by preparing the incremental analysis for outsourcing decision. (Use a minus sign of parentheses in the Difference column if the cost to make exceeds the cost to outsource) Incremental Analysis Make Outsource Outsourcing Decisions Ski Poles Ski Poles Difference Variable costs Plus Fixed costs Total cost of producing 120,000 pairs or poles Winter Fun outsource production because its operating income would 2. Who freed capucity could be used to produce ski boots that would provide $894,000 of operating income, should Winter Fun outsourceski pole production? Begin by preparing the incremental analysis for outsourcing decision if the freed capacity could be used to produce ski boots that would provide 584,000 of operating income Complete tartowe bows Erde er for any zero balances. Use a minus sign or parentheses in the Difference column the cost to make exceeds the cost to outsource) Incremental Analysis Make Outsource Outsourcing Decisions Ski Poles Ski Poles Difference Total cost of producing 120.000 pairs of poles from Requirement 1) Less: Income from boots outsource Nel cos the freed capacity could be used to produce ski boots that would provide 5094.000 of operating income, Winter Fun outsources ski pole production because I operating income would Cost per pair (120,000 pairs) Manufacturing Costs Total Cost Direct Materials $ 1,140,000 $ 9.50 Direct Labor 78,000 0.65 Variable MOH 5.90 708,000 828,000 Fixed MOH 6.90 $ 2,754,000 $ 22.95 Total