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Winter Sports manufactures snowboards. Its cost of making 1,900 bindings is as follows: (Click the icon to view the costs.) Suppose Lancaster 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 Lancaster will enable the company to avoid $1,900 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.) 1. Winter Sports' accountants predict that purchasing the bindings from Lancaster will enable the company to avoid $1,900 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 Lancaster 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: (a) make bindings, (b) buy bindings and leave facilities idle, or (c) buy bindings and make another product. \begin{tabular}{lrr} \hline Direct materials & $ & 17,500 \\ Direct labor & 3,000 \\ Variable overhead & 2,120 \\ Fixed overhead & 6,800 \\ \cline { 2 - 3 } Total manufacturing costs for 1,900 bindings & $29,420 \\ \hline \end{tabular}

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