Answered step by step
Verified Expert Solution
Question
1 Approved Answer
X-Perience manufactures snowboards. Its cost of making 1,850 bindings is as follows: (Click the icon to view the costs.) Suppose an outside supplier will sell
X-Perience manufactures snowboards. Its cost of making 1,850 bindings is as follows: (Click the icon to view the costs.) Suppose an outside supplier will sell bindings to X-Perience for $13 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 $0.60 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 $2,500 of fixed overhead. Prepare an analysis to show whether X-Perience should make or buy the bindings. (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. Use a minus sign or parentheses in the Difference column when the cost to make exceeds the cost to buy.) Incremental Analysis Buy (Outsource) Outsourcing Decision Bindings Bindings Difference Variable Costs Plus: Fixed Costs Make Total cost of 1,850 bindings X Data Table 17,750 3,400 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead.. Total manufacturing costs Cost per pair ($30,155/1,850) 2,355 6,650 $ 30,155 $ 16.30 Print Done i Requirements X 1. X-Perience's accountants predict that purchasing the bindings from the outside supplier will enable the company to avoid $2,500 of fixed overhead. Prepare an analysis to show whether X-Perience should make or buy the bindings. 2. The facilities freed by purchasing bindings from the outside supplier can be used to manufacture another product that will contribute $2,700 to profit. Total fixed costs will be the same as if X-Perience had produced the bindings. Show which alternative 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. 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