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X - Perience manufactures snowboards. Its cost of making 1,880 bindings is as follows EEB (Click the icon to view the costs.) Suppose an outside
X - Perience manufactures snowboards. Its cost of making 1,880 bindings is as follows EEB (Click the icon to view the costs.) Suppose an outside supplier will sell bindings to X- Perience for $16 each. X Perience 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 $0.50 per binding Read the requirements. Requirement 1. X -Perience's accountants predict that purchasing the bindings from the outside supplier will enable the company to avoid $2,100 of fixed overhead. Prepare an analysis to show whether x - Perience should make or buy the bindings. (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. Use a minus sign or parentheses in the Difference column when the cost to make exceeds the cost to buy.) Make Incremental Analysis Outsourcing Decision Buy (Outsource) Bindings Bindings Difference Variable Costs Plus: Fixed Costs Total cost of 1,880 bindings Decision: Requirement 2. The facilities freed by purchasing bindings from the outside supplier can be used to manufacture another product that will contribute $3,500 to profit. Total fixed costs will be the same as if x - Perience had produced the bindings. Show which altemative makes the best use of X - Perience'ss facilities: (a) make bindings, (b) buy bindings and leave facilities idle, or (c) buy bindings and make another product. Enter a "0" 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 Analysis Outsourcing Decision (a) Make Binding (c) Make Facilities Idle Another Product Variable Costs Plus: Fixed Costs Total cost of 1,880 bindings Less: Profit from another product Net cost Decision: Data Table $18,250 3,300 2,100 6,900 $30,550 $16.25 Direct materials Variable manufacturing overhead Fixed manufacturing overhead Cost per pair ($30,550 1,880) Print Done
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