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Winter Sports manufactures snowboards. Its cost of making 1,800 bindings is as follows: (Click the icon to view the costs.) Suppose Monroe will sell bindings to Winter Sports for $12 each. Winter Sports would pay $2 per unit to transport the bindings to its manufacturing plant, where it would add its own logo at a cost of $0.70 per binding. Read the requirements. Data table Direct materials Direct labor Variable overhead Fixed overhead Total manufacturing costs for 1,800 bindings Print Done $ 17,590 3,300 2,080 6.900 $ 29,870 - X Requirements 1. Winter Sports' accountants predict that purchasing the bindings from Monroe will enable the company to avoid $2,100 of fixed overhead. Prepare an analysis to show whether Winter Sports should make or buy the bindings. 2. The facilities freed by purchasing bindings from Monroe can be used to manufacture another product that will contribute $2,700 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. Print Done - X

Winter Sports manufactures snowboards. Its cost of making 1,800 bindings is as follows: (Click the icon to view the costs.) Suppose Monroe will sell bindings to Winter Sports for $12 each. Winter Sports would pay $2 per unit to transport the bindings to its manufacturing plant, where it would add its own logo at a cost of $0.70 per binding. Read the requirements. Data table Direct materials Direct labor Variable overhead Fixed overhead Total manufacturing costs for 1,800 bindings Print Done $ 17,590 3,300 2,080 6.900 $ 29,870 - X Requirements 1. Winter Sports' accountants predict that purchasing the bindings from Monroe will enable the company to avoid $2,100 of fixed overhead. Prepare an analysis to show whether Winter Sports should make or buy the bindings. 2. The facilities freed by purchasing bindings from Monroe can be used to manufacture another product that will contribute $2,700 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. Print Done - X

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 1,800 bindings is as follows: (Click the icon to view the costs.) Suppose Monroe will sell bindings to Winter Sports for $12 each. Winter Sports would pay $2 per unit to transport the bindings to its manufacturing plant, where it would add its own logo at a cost of $0.70 per binding. Read the requirements. Data table Direct materials Direct labor Variable overhead Fixed overhead Total manufacturing costs for 1,800 bindings Print a da pa s Done $ 17,590 3,300 2,080 6,900 $ 29,870 X Requirements 1. Winter Sports' accountants predict that purchasing the bindings from Monroe will enable the company to avoid $2,100 of fixed overhead. Prepare an analysis to show whether Winter Sports should make or buy the bindings. 2. The facilities freed by purchasing bindings from Monroe can be used to manufacture another product that will contribute $2,700 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. Print Done X ld
Transcribed Image Text:Winter Sports manufactures snowboards. Its cost of making 1,800 bindings is as follows: (Click the icon to view the costs.) Suppose Monroe will sell bindings to Winter Sports for $12 each. Winter Sports would pay $2 per unit to transport the bindings to its manufacturing plant, where it would add its own logo at a cost of $0.70 per binding. Read the requirements. Data table Direct materials Direct labor Variable overhead Fixed overhead Total manufacturing costs for 1,800 bindings Print a da pa s Done $ 17,590 3,300 2,080 6,900 $ 29,870 X Requirements 1. Winter Sports' accountants predict that purchasing the bindings from Monroe will enable the company to avoid $2,100 of fixed overhead. Prepare an analysis to show whether Winter Sports should make or buy the bindings. 2. The facilities freed by purchasing bindings from Monroe can be used to manufacture another product that will contribute $2,700 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. Print Done X ld
Requirement 1. Winter Sports' accountants predict that purchasing the bindings from Monroe will enable the company to avoid $2,100 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.) Variable costs: Direct materials Direct labor Variable overhead Binding costs Fixed costs Purchase price from Monroe Transportation Logo Total differential cost of 1,800 bindings Should Winter Sports make or buy the bindings? Decision: Show Transcribed Text Variable Costs: Binding costs Direct materials Direct labor Variable overhead Fixed costs Purchase price from Monroe Transportation Decision: Make Bindings Requirement 2. The facilities freed by purchasing bindings from Monroe can be used to manufacture another product that will contribute $2,700 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. (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 Logo Expected profit from new product. Expected net cost of obtaining 1,800 bindings Which alternative makes the best use of Winter Sports' facilities? Make Bindings Difference (Make-Outsource) 3 Outsource Bindings Facilities Idle Ć Make New Product
Transcribed Image Text:Requirement 1. Winter Sports' accountants predict that purchasing the bindings from Monroe will enable the company to avoid $2,100 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.) Variable costs: Direct materials Direct labor Variable overhead Binding costs Fixed costs Purchase price from Monroe Transportation Logo Total differential cost of 1,800 bindings Should Winter Sports make or buy the bindings? Decision: Show Transcribed Text Variable Costs: Binding costs Direct materials Direct labor Variable overhead Fixed costs Purchase price from Monroe Transportation Decision: Make Bindings Requirement 2. The facilities freed by purchasing bindings from Monroe can be used to manufacture another product that will contribute $2,700 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. (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 Logo Expected profit from new product. Expected net cost of obtaining 1,800 bindings Which alternative makes the best use of Winter Sports' facilities? Make Bindings Difference (Make-Outsource) 3 Outsource Bindings Facilities Idle Ć Make New Product
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