Solved: Cool Boards manufactures snowboards Its cost of

making 30 125 bindings

Cool Boards manufactures snowboards Its cost of making 30 125 bindings

Cool Boards manufactures snowboards. Its cost of making 30,125 bindings is as follows:
Direct materials...................................................................................................... $ 25,000
Direct labor............................................................................................................ 83,000
Variable manufacturing overhead.......................................................................... 50,000
Fixed manufacturing overhead.............................................................................. 83,000
Total manufacturing costs...................................................................................... $ 241,000
Cost per pair ($ 241,000 ÷ 30,125)........................................................................ $ 8.00

Suppose an outside supplier will sell bindings to Cool Boards for $ 17 each. Cool Boards will
pay $ 1.00 per unit to transport the bindings to its manufacturing plant, where it will add its own
logo at a cost of $ 0.50 per binding.

Requirements
1. Cool Board’s accountants predict that purchasing the bindings from the outside supplier will
enable the company to avoid $ 2,200 of fixed overhead. Prepare an analysis to show whether
Cool Boards should make or buy the bindings.
2. The facilities freed by purchasing bindings from the outside supplier can be used to
manufacture another product that will contribute $ 2,600 to profit. Total fixed costs will be the
same as if Cool Boards had produced the bindings. Show which alternative makes the best use
of Cool Boards facilities: (a) make bindings, (b) buy bindings and leave facilities idle, or (c) buy
bindings and make another product.

Cool Boards manufactures snowboards Its cost of making 30 125 bindings

ANSWER
https://solvedquest.com/cool-boards-manufactures-snowboards-its-cost-of-
making-30-125-bindings/

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