Answered: Requirement 1. Winter Sports'…

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter10: Cost Analysis For Management Decision Making

Section: Chapter Questions

Problem 13P: Deuce Sporting Goods manufactures a high-end model tennis racket. The company’s forecasted income...

See similar textbooks

Related questions

Question

Winter Sports manufactures snowboards. Its cost of making 1,800

bindings is as follows in the data table.

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 $0.60 per binding.

Transcribed Image Text:Requirement 2. The facilities freed by purchasing bindings from Livingston can be used to manufacture another product that will contribute $3,300 to profit. Total fixed costs will be the same as if Winter Sports had produced the bindings. Show which alternative makes the best use of Winter Sports' facilities. (Only enter the net relevant costs. Enter all costs as positive values. Use a minus sign or parentheses for decreases to net costs.) Outsource Bindings Data Table Make Facilities Make New Binding costs Bindings Idle Product Variable Costs: Direct materials 17,600 Direct materials Direct labor 2,700 Direct labor Variable overhead 2,060 Variable overhead 6,500 Fixed overhead Fixed costs 2$ 28,860 Purchase price from Livingston Total manufacturing costs for 1,800 bindings Transportation Logo Print Done Expected profit from new product Expected net cost of obtaining 1,800 bindings Which alternative makes the best use of Winter Sports' facilities? Decision:

Transcribed Image Text:Winter Sports manufactures snowboards. Its cost of making 1,800 bindings is as follows: E (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 $0.60 per binding. Read the requirements. Requirement 1. Winter Sports' accountants predict that purchasing the bindings from Livingston will enable the company to avoid $2,500 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 Outsource Difference - X Data Table Binding costs Bindings Bindings (Make-Outsource) Variable costs: Direct materials Direct materials 17,600 Direct labor Direct labor 2,700 Variable overhead Variable overhead 2,060 Fixed costs 6,500 Fixed overhead Purchase price from Livingston 28,860 Transportation Total manufacturing costs for 1,800 bindings Logo Print Done Total differential cost of 1,800 bindings Should Winter Sports make or buy the bindings? Decision:

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions