Homework: Chapter 25 Homework Score: 0.41 of 1 pt 3 of 3 (3 complete) HW Score:
ID: 2516226 • Letter: H
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Homework: Chapter 25 Homework Score: 0.41 of 1 pt 3 of 3 (3 complete) HW Score: 67.79%, 2.03 P25-25A (similar to) Question Hei Cool Boards manufactures snowboards. Its cost of making 1,700 bindings is as follows (Click the icon to vew the costs ) Suppose Topnotch will sell bindings to Cool Boards for $13 each. Cool Boards would pay $3 per unit to transport the bindings to its manufacturing plant, where it w add its own logo at a cost of S0.50 per binding Read the requirements. Requirement 1. Cool Boards' accountants predict that purchasing the bindings from Topnotch will enable the company to avoid $2,100 of fixed overhead Prepare a analysis to show whether Cool Boards 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 Binding costs Bindings Bindings (Make-Outsource) Variable costs 17,580 3,100 2,060 2,100 17,580 3.100 2,060 2,100 (22.100) (5,100) Direct materials Direct labor Variable overhead Fixed costs Purchase price from Topnotch Transportation Logo 22,100 5,100 850 28.050 S 24,840 S (3 210 Total differental cost of 1,700 bindings Enter any number in the edit fields and then click Check Answer. Clear All Check Answer @e É ???Explanation / Answer
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The cost will be lowest if binding is outsourced and no other product is manufactured.
Outsourcing Make Bindings Idle Make new product Variable cost Direct material 17580 Direct labor 3100 variable overhead 2060 Fixed cost 6800 6800 Purchase price 13*1700=22100 22100 Transportation 3*1700=5100 5100 Logo .50*1700=850 850 Expected profit from new product (3300) expected net cost of 1700 bindings 29540 28050 31550Related Questions
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