The expected volume will be estimated by the sales and production of 10,000 pair of skis. Skis and bindings cost will be (1) Direct labor: $35 (2) Direct material: $30 (3) Total overhead: $15 which total $80. They have discussed purchasing the bindings. Per binding: $5.25 or $10.50 per pair. If they accept this offer then direct-labor and variable-overhead costs will decrease 10%... displayed 300 characters
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If they accept this offer then direct-labor and variable-overhead costs will decrease 10%. Direct-material costs will decrease 20%. I will explain if they should make or buy the bindings and what would be an acceptable price for them. Then we take a look at volume of sales revised at 12,500 pair. I will explain if they should make or buy then and what qualitative factors they should be kept in mind when making such a decision... displayed 300 characters
