(Solved):Outdoor Life manufactures snowboards. Its cost of making 2,000 bindings is as follows: …

 

Question

Outdoor Life manufactures snowboards. Its cost of making 2,000 bindings is as follows:

Direct materials $17,550

Direct labor 3,400

Variable overhead 2,040

Fixed overhead 6,300

Total manufacturing cost for 2,000 bindings $29,290

Suppose Lancaster will sell bindings to Outdoor Life for $14 each. Outdoor Life would pay $3 per unit to transport the bindings to its manufacturing plant, where it would add its own logo at a cost of $0.70 per binding.

Outdoor Life’s accountants predict that purchasing the bindings from Lancaster

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