Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Winter Sports manufactures snowboards. Its cost of making 23,600 bindings is as follows: (Click the icon to view the casts.) Suppose an outside supplier
Winter Sports manufactures snowboards. Its cost of making 23,600 bindings is as follows: (Click the icon to view the casts.) Suppose an outside supplier will sell bindings to Winter Sports for $13 each. Winter Sports will pay $3.00 per unit to transport the bindings to its manufacturing plant, where it will add its own logo at a cost of $0.70 per binding. Read the requirements. Requirement 1. Winter Sports' accountants predict that purchasing the bindings from the outside supplier will enable the company to avoid $1,900 of fixed overhead. Prepare an analysis to show whether the company should make or buy the bindings. (Enter a "D" for any zaro balances. Round any per unit amounts to the nearest cant and your final answers to the nearest whole dollar. Use a minus sign or parentheses in the Difference column when the cost to make exceeds the cost to buy) Incremental Analytic Buy (Outsource) Bindings Outsourcing Decision Variable Costs Plus: Fixed Costs Total cost of 23,600 bindings Decision: Make Bindings Difference Requirement 2. The facilities freed by purchasing bindings from the outside supplier can be used to manufacture another product that will contribute $2,600 to profit. Total fixed costs will be the same as if Winter Sports had produced the bindings. Show which alternative makes the best use of Winter Sports facilities: (a) make bindings, (b) buy bindings and leave facilities idle, or (c) buy bindings and make another product. (Enter a "O" for any zero balances. Round any per unit amounts to the nearest cent and your final answers to the nearest whole dollar.) Buy (Outsource) Bindings (b) Leave Incremental Analysi Outsourcing Decision (a) Make Binding Variable Costs Facilities Idle Another Product Data table - X Plus: Fixed Costs Total cost of 23,800 bindings Less: Profit from another product Net coct Decision Direct material Direct labor 82,000 Variable manufacturing overhead 48,000 Fixed manufacturing overhead Total manufacturing costs. $ 236,000 Cost per pair ($238,000+23,800) .....$ 10.00 Print Done
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started