Mountaineer, Inc. currently makes 6,000 pairs of weatherproof hiking boots each year. The boots sell for $119. Mountaineer has been manufacturing the boots and applying the weatherproofing as the final process before packaging. However, the company is concerned about the costs associated with the weatherproofing process. The company is concerned that the EPA will not approve of their disposal of the residue from the process, resulting in heavy monetary penalties. Mountaineer has found a manufacturing company that can waterproofing and packaging of the boots, its insurance premiums will be reduced. Mountaineer's standard cost of the waterproofing and packaging process for one unit' is listed below.

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$5 Direct materials ($1 for waterproofing and $4 for packaging) Direct labor (same person waterproofs and packages) Variable overhead ($6 for waterproofing and $2 for packaging) Direct fixed overhead (Insurance) Nondifferential fixed overhead $3 $8 $6 $8 $30 Total Cost $5 Direct materials ($1 for waterproofing and $4 for packaging) Direct labor (same person waterproofs and packages) Variable overhead ($6 for waterproofing and $2 for packaging) Direct fixed overhead (Insurance) Nondifferential fixed overhead $3 $8 $6 $8 $30 Total Cost

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Make Outsource Purchase price of tube 18 Direct material 5 Direct labor 3 Variab... View the full answer