Winter Sports makes downhill ski equipment. Assume that Atomic has offered to produce ski poles for...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Winter Sports makes downhill ski equipment. Assume that Atomic has offered to produce ski poles for Winter Sports for $17 per pair. Winter Sports needs 180,000 pairs of poles per period. Winter Sports can only avoid $150,000 of fixed costs if it outsources; the remaining fixed costs are unavoidable. Winter Sports currently has the following costs at a production level of 180,000 pairs of poles: (Click the icon to view the table.) 1. Should Winter Sports outsource ski pole production if the next best use of the freed capacity is to leave it idle? What effect will outsourcing have on Winter Sports' operating income? 2. If the freed capacity could be used to produce ski boots that would provide $447,000 of operating income, should Winter Sports outsource ski pole production? 1. Should Winter Sports outsource ski pole production if the next best use of the freed capacity is to leave it idle? What effect will outsourcing have on Winter Sports' 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.) Incremental Analysis Outsourcing Decisions Variable costs: Plus: Fixed costs Total cost of producing 180,000 pairs of poles Enter any number in the edit fields and then click Check Answer. parts remaining 3 Pe Make Ski Poles Outsource Ski Poles Difference Clear All Data Table Cost per pair Total Cost (180,000 pairs) 1,530,000 $8.50 171,000 972,000 1,206,000 $ 3,879,000 Manufacturing Costs Direct Materials $ Direct Labor Variable MOH Fixed MOH Total Print Done 0.95 5.40 6.70 $ 21.55 X Winter Sports makes downhill ski equipment. Assume that Atomic has offered to produce ski poles for Winter Sports for $17 per pair. Winter Sports needs 180,000 pairs of poles per period. Winter Sports can only avoid $150,000 of fixed costs if it outsources; the remaining fixed costs are unavoidable. Winter Sports currently has the following costs at a production level of 180,000 pairs of poles: (Click the icon to view the table.) 1. Should Winter Sports outsource ski pole production if the next best use of the freed capacity is to leave it idle? What effect will outsourcing have on Winter Sports' operating income? 2. If the freed capacity could be used to produce ski boots that would provide $447,000 of operating income, should Winter Sports outsource ski pole production? 1. Should Winter Sports outsource ski pole production if the next best use of the freed capacity is to leave it idle? What effect will outsourcing have on Winter Sports' 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.) Incremental Analysis Outsourcing Decisions Variable costs: Plus: Fixed costs Total cost of producing 180,000 pairs of poles Enter any number in the edit fields and then click Check Answer. parts remaining 3 Pe Make Ski Poles Outsource Ski Poles Difference Clear All Data Table Cost per pair Total Cost (180,000 pairs) 1,530,000 $8.50 171,000 972,000 1,206,000 $ 3,879,000 Manufacturing Costs Direct Materials $ Direct Labor Variable MOH Fixed MOH Total Print Done 0.95 5.40 6.70 $ 21.55 X
Expert Answer:
Answer rating: 100% (QA)
To determine whether Winter Sports should outsource ski pole production we need to compare the total cost of producing 180000 pairs of poles internall... View the full answer
Related Book For
Managerial Accounting An Introduction to Concepts Methods and Uses
ISBN: 978-0324639766
10th Edition
Authors: Michael W. Maher, Clyde P. Stickney, Roman L. Weil
Posted Date:
Students also viewed these accounting questions
-
At a production level of 40,000 units, Rippon Pty Ltd had the following manufacturing costs: Prime Costs $ 340,000 Fixed Factory Overhead $60,000 Variable Factory Overhead $100,000 If 50,000 units...
-
Idle production capacity may be related to inventory or capacity management. How would the pricing component of the marketing mix reduce idle production capacity for (a) A car wash, (b) A stage...
-
A ski shop lists ski boots at 240% of cost. If the ski shop prices the DX2 Model at $396, what was the cost of the ski boots to the shop?
-
Which of the following is a batch-level activity of Clear Water Bay Inc, a car manufacturer? 1. Its CEO attends auto shows to demonstrate the latest model of cars. 2. Its engineers remediate a design...
-
A second-order autoregressive model for the gas prices is: Using values from the table, what is the predicted value for January 2007 (the value just past those given in the table)? Dependent variable...
-
Hexavalent chromium has been identified as an inhalation carcinogen and an air toxin of concern in a number of different locales. The article "Airborne Hexavalent Chromium in Southwestern Ontario"...
-
Height, Weight, and BodyFat Figure 2.87 shows a bubble plot of height, weight, and body fat percentage for a sample of $100 \mathrm{men}$, from the dataset BodyFat. The body fat percentage is...
-
Perez Company acquires an ore mine at a cost of $1,400,000. It incurs additional costs of $400,000 to access the mine, which is estimated to hold 1,000,000 tons of ore. The estimated value of the...
-
Problem: Module 3 Textbook Problem 5 Learning Objective: 3-6 Using the straight-line method show how bonds issued at a discount. affect financial statements Diaz Company issued $91,000 face value of...
-
Sayaka Tar and Gravel Ltd. operates a road construction business. In its first year of operations, the company obtained a contract to construct a road for the municipality of Cochrane West, and it is...
-
To make informed business decisions as a manager, you should be familiar with the characteristics of the demand curve for your product. However, a product's demand curve is idiosyncratic, and thus...
-
A firm is 40% financed by debt with a yield-to-maturity of 8.5%. The equity has a beta of 1.3, the market risk premium is 8.4% and the risk-free rate is 3.8%. What is the firm's WACC if the tax rate...
-
A project requires an increase in net working capital of $150,000 at time 0 that will be recovered at the end of its 10 year life. If the opportunity cost of capital is 8%, what is the effect of NWC...
-
Zach Ltd. produced the following data for the year 2015 - o Interest Income $4,650,000 o Capital Gain realized $50,000 o Dividend Income from company's 15% ownership in XYZ Ltd. $65,000 o Corporate...
-
1. A $450,000 mortgage is amortized over 25 years at an interest rate of 3% per year. Payments are made monthly. a) Determine the effective interest rate applicable to the mortgage. (2 marks) b)...
-
Bribie Thriller Company has debt outstanding with a book value of $30 million. The debt is trading in the market at 90 per cent of book value. The yield to maturity at current market prices is 10 per...
-
Which type of positioning tends to associate a given product or brand with a specific foreign culture. Successful examples of this type of positioning include Swiss watches, German automobiles, and...
-
A fast-food restaurant averages 150 customers per hour. The average processing time per customer is 90 seconds. a. Determine how many cash registers the restaurant should have if it wishes to...
-
Emily Johnson recently joined Growth Chemicals, Inc., as assistant controller. Growth Chemicals processes chemicals for use in fertilizers. During her first month on the job, Emily spent most of her...
-
Hillson & Brady (H&B), a janitorial service, has two clients, Greeley Hospital and Greeley Junior High School. The following is information about H&s revenues and costs (in thousands) by customer for...
-
Mason prepared a budget last period that called for sales of 200 units at a price of $100 each. Variable manufacturing costs were budgeted to be $39 per unit, and variable marketing costs were...
-
Identify and briefly describe the purpose and functions of a management system, work process and organization policy.
-
Identify and briefly explain the three levels of strategy and explain their differences.
-
Identify and describe the meaning of the term's formalization and informal.
Study smarter with the SolutionInn App