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Winter Sports manufactures snowboards. Its cost of making 1,700 bindings is as follows: (Click the icon to view the costs.) Suppose Livingston will sell bindings to Winter Sports for $14 each. Winter Sports would pay $1 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. Requirement 1. Winter Sports' accountants predict that purchasing the bindings from Livingston will enable the company to avoid $2,200 of fixed overhead. Prepare an analysis to show whether Winter Sports should make or buy the bindings. (Only enter the net relevant costs. For the Difference column, use a minus sign or parentheses only when the cost of outsourcing exceeds the cost of making the bindings in-house.) Make Bindings Outsource Bindings Difference (Make-Outsource) - X Binding costs Data table 4 Variable costs: Direct materials Direct labor Variable overhead Fixed costs Dirakan man from himnan Direct materials Direct labor Variable overhead Fixed overhead Total manufacturing costs for 1,700 bindings $ 17,530 3,300 2,120 6,400 29,350

Winter Sports manufactures snowboards. Its cost of making 1,700 bindings is as follows: (Click the icon to view the costs.) Suppose Livingston will sell bindings to Winter Sports for $14 each. Winter Sports would pay $1 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. Requirement 1. Winter Sports' accountants predict that purchasing the bindings from Livingston will enable the company to avoid $2,200 of fixed overhead. Prepare an analysis to show whether Winter Sports should make or buy the bindings. (Only enter the net relevant costs. For the Difference column, use a minus sign or parentheses only when the cost of outsourcing exceeds the cost of making the bindings in-house.) Make Bindings Outsource Bindings Difference (Make-Outsource) - X Binding costs Data table 4 Variable costs: Direct materials Direct labor Variable overhead Fixed costs Dirakan man from himnan Direct materials Direct labor Variable overhead Fixed overhead Total manufacturing costs for 1,700 bindings $ 17,530 3,300 2,120 6,400 29,350

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Winter Sports manufactures snowboards. Its cost of making 1,700 bindings is as follows: (Click the icon to view the costs.) Suppose Livingston will sell bindings to Winter Sports for $14 each. Winter Sports would pay $1 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. Requirement 1. Winter Sports' accountants predict that purchasing the bindings from Livingston will enable the company to avoid $2,200 of fixed overhead. Prepare an analysis to show whether Winter Sports should make or buy the bindings. (Only enter the net relevant costs. For the Difference column, use a minus sign or parentheses only when the cost of outsourcing exceeds the cost of making the bindings in-house.) Make Bindings Outsource Bindings Difference (Make-Outsource) - X Binding costs Data table Variable costs: $ 49 Direct materials Direct labor Variable overhead Fixed costs Durahan minn fram manten ? 7 Q A 2 W S 43 * 3 # X E D $ 4 C R % F 5 T V 6 G Y B 4 & 7 H N 8 J 144 ( Direct materials Direct labor Variable overhead Fixed overhead Total manufacturing costs for 1,700 bindings insert 이 O 9 K M O < L P { + [ 2 17,530 3,300 2,120 6,400 $ 29,350 prt sc 4 backspace 1 pause delete home enter og up DQ
Transcribed Image Text:Winter Sports manufactures snowboards. Its cost of making 1,700 bindings is as follows: (Click the icon to view the costs.) Suppose Livingston will sell bindings to Winter Sports for $14 each. Winter Sports would pay $1 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. Requirement 1. Winter Sports' accountants predict that purchasing the bindings from Livingston will enable the company to avoid $2,200 of fixed overhead. Prepare an analysis to show whether Winter Sports should make or buy the bindings. (Only enter the net relevant costs. For the Difference column, use a minus sign or parentheses only when the cost of outsourcing exceeds the cost of making the bindings in-house.) Make Bindings Outsource Bindings Difference (Make-Outsource) - X Binding costs Data table Variable costs: $ 49 Direct materials Direct labor Variable overhead Fixed costs Durahan minn fram manten ? 7 Q A 2 W S 43 * 3 # X E D $ 4 C R % F 5 T V 6 G Y B 4 & 7 H N 8 J 144 ( Direct materials Direct labor Variable overhead Fixed overhead Total manufacturing costs for 1,700 bindings insert 이 O 9 K M O < L P { + [ 2 17,530 3,300 2,120 6,400 $ 29,350 prt sc 4 backspace 1 pause delete home enter og up DQ
Suppose Livingston will sell bindings to Winter Sports for $14 each. Winter Sports would pay $1 per unit to transport the bindings to its manufacturing plant, where it would add its own logo at a cost of $0 binding. Read the requirements 10ul unterenul CUM O 1,Foungs Should Winter Sports make or buy the bindings? Decisions ▾ Requirement 2. The facilities freed by purchasing bindings from Livingston can be used to manufacture another product that will contribute $2,900 to profit. Total fixed costs will be the same as if Winter Sport had produced the bindings. Show 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) Outsource Bindings Make Make New Product Binding costs Bindings Variable Costs 4 'O L ente niat materiale 7 in t 14 tab -1 caps lock 2 "3 W ? 7 2 W Поли A E S 4 3 R Q A S N M m E alt ctri < Winter Sports manufactures snowboards. Its cost of making 1,700 bindings is as follows: (Click the icon to view the costs.) Suppose Livingston will sell bindings to Winter Sports for $14 each. Winter Sports would pay $1 per unit to transport the bindings to its manufacturing plant, where it would add i binding. Read the requirements. HELLI Variable overhead Fixed costs Purchase price from Livingston Transportation Logo Expected profit from new product Expected net cost of obtaining 1,700 bindings Which alternative makes the best use of Winter Sports' facilities? Decision: # الالا ال الـ * E %C 5 $ D Facilities Idle T 4 R G 40 6 % F ▼ Y 5 & B 7 H T 6 G 8 U & Y 9 K hp 7 H U 8 J 144 ( P 4 9 K . [ ? > O 1 O L pause M Apud P ( [
Transcribed Image Text:Suppose Livingston will sell bindings to Winter Sports for $14 each. Winter Sports would pay $1 per unit to transport the bindings to its manufacturing plant, where it would add its own logo at a cost of $0 binding. Read the requirements 10ul unterenul CUM O 1,Foungs Should Winter Sports make or buy the bindings? Decisions ▾ Requirement 2. The facilities freed by purchasing bindings from Livingston can be used to manufacture another product that will contribute $2,900 to profit. Total fixed costs will be the same as if Winter Sport had produced the bindings. Show 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) Outsource Bindings Make Make New Product Binding costs Bindings Variable Costs 4 'O L ente niat materiale 7 in t 14 tab -1 caps lock 2 "3 W ? 7 2 W Поли A E S 4 3 R Q A S N M m E alt ctri < Winter Sports manufactures snowboards. Its cost of making 1,700 bindings is as follows: (Click the icon to view the costs.) Suppose Livingston will sell bindings to Winter Sports for $14 each. Winter Sports would pay $1 per unit to transport the bindings to its manufacturing plant, where it would add i binding. Read the requirements. HELLI Variable overhead Fixed costs Purchase price from Livingston Transportation Logo Expected profit from new product Expected net cost of obtaining 1,700 bindings Which alternative makes the best use of Winter Sports' facilities? Decision: # الالا ال الـ * E %C 5 $ D Facilities Idle T 4 R G 40 6 % F ▼ Y 5 & B 7 H T 6 G 8 U & Y 9 K hp 7 H U 8 J 144 ( P 4 9 K . [ ? > O 1 O L pause M Apud P ( [
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