Snow Ride manufactures snowboards. Its cost of making 1,900 bindings is as follows: Direct materials                                                         $   17,590 Direct laabor                                                                    3,200 Variable overhead                                                            2,080 Fixed overhead                                                                 6,300     Total manufacturing cost for 1,900 bindings           $      29,170     Suppose Livingston will sell bindings to Snow Ride for $13 each. Snow Ride would pay $3 per unit to transport the bindings to its manufacturing plant, where it would add its own logo at a cost of $0.50 per binding. Requirments: 1. Snow Ride's accountants predict that

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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Snow Ride manufactures snowboards. Its cost of making 1,900 bindings is as follows:

Direct materials                                                         $   17,590

Direct laabor                                                                    3,200

Variable overhead                                                            2,080

Fixed overhead                                                                 6,300    

Total manufacturing cost for 1,900 bindings           $      29,170    

Suppose Livingston will sell bindings to Snow Ride for $13 each. Snow Ride would pay $3 per unit to transport the bindings to its manufacturing plant, where it would add its own logo at a cost of $0.50 per binding.

Requirments:

1. Snow Ride's accountants predict that purchasing the bindings from livingston will enable the company to avoid $2,100 of fixed overhead. Prepare an analysis to show whether Snow Ride should make or buy the bindings.

2. The facilities freed by purchasing bindings from Livingston can be used to manufacture another product that will contribute $3,100 to profit. Total fixed cxosts will be the same as if Snow Ride had produced the bindings. Show which alternative makes the best use of Snow Ride's facilities: (a) make bindings, (b) buy bindings and leave facilities idle, or (c) buy bindings and make another product

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