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Winter Sports manufactures snowboards. Its cost of making 1,800 bindings is as follows: (Click the icon to view the costs.) Suppose Lancaster will sell bindings
Winter Sports manufactures snowboards. Its cost of making 1,800 bindings is as follows: (Click the icon to view the costs.) Suppose Lancaster will sell bindings to Winter Sports for $16 each. Winter Sports 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. Read the requirements. Total differential cost of 1.800 bindings $ 24,940 $ 34,920 $ (9,980) Should Winter Sports make or buy the bindings? Decision: Make the bindings. Requirement 2. The facilities freed by purchasing bindings from Lancaster can be used to manufacture another product that will contribute $2,800 to profit. Total fixed costs will be the same as if Winter Sports had produced the bindings. Sh which alternative makes the best use of Winter Sports' facilities. (Only enter the net relevant costs. Enter all costs as positive values. Use a minus sign or parentheses for decreases to net costs.) Make Bindings Outsource Bindings Facilities Make New idle Product A Data Table Binding costs Variable Costs: Direct materials Direct materials $ 17,550 3,100 Direct labor Variable overhead Direct labor Variable overhead Fixed costs Purchase price from Lancaster Transportation 2,090 6,600 Fixed overhead $ 29,340 Total manufacturing costs for 1,800 bindings Logo Expected profit from new product Print Done Expected net cost of obtaining 1,800 bindings
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