$ Manufacturing Costs Direct Materials Direct Labor Variable MOH Total Cost 950,000 161,500 969,000 1,197,000 3,277,500 Cost per pair (190,000 pairs) $ 5.00 0.85 5.10 6.30 $ 17.25 Fixed MOH Total Do-it makes downhill ski equipment. Assume that Atomic has offered to produce ski poles for Do-it for $19 per pair. Do - it needs 190,000 pairs of poles per period. Do-it can only avoid $110,000 of fixed costs if it outsources, the remaining fixed costs are unavoidable. Do-it currently has the following costs at a production level of 190,000 pairs of poles: 2 (Click the icon to view the table.) 1. Should Do-it outsource ski pole production if the next best use of the freed capacity is to leave it idle? What effect will outsourcing have on Do-it's operating income? If the freed capacity could be used to produce ski boots that would provide $1,619,500 of operating income, should Do-it outsource ski pole production? 2. 1. Should Do-it outsource ski pole production if the next best use of the freed capacity is to leave it idle? What effect will outsourcing have on Do-it's operating income? Begin by preparing the incremental analysis for outsourcing decision. (Use a minus sign or parentheses in the Difference column if the cost to make exceeds the cost to outsource.) Make Ski Poles Outsource Ski Poles Difference Incremental Analysis Outsourcing Decisions Variable costs: Plus: Fixed costs Total cost of producing 190,000 pairs of poles