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Part $1$

Safety FirstSafety$$First

makes downhill ski equipment. Assume that Atomic has offered to produce ski poles for

Safety FirstSafety$$First

for

$ $22$$$22$

per pair.

Safety FirstSafety$$First

needs

$190$ comma $000190,000$

pairs of poles per period.

Safety FirstSafety$$First

can only avoid

$ $190$ comma $000$$$190,000$

of fixed costs if it$$ outsources; the remaining fixed costs are unavoidable.

Safety FirstSafety$$First

currently has the following costs at a production level of

$190$ comma $000190,000$

pairs of$$ poles:

View the costs.

LOADING...

$1.$

Should

Safety FirstSafety$$First

outsource ski pole production if the next best use of the freed capacity is to leave it$$ idle? What effect will outsourcing have on

Safety First'sSafety$$First$\text{'}$s

operating$$ income?

$2.$

If the freed capacity could be used to produce ski boots that would provide

$ $1$ comma $405$ comma $500$$$1,405,500$

of operating$$ income, should

Safety FirstSafety$$First

outsource ski pole$$ production?