Krass Snowboard Mfg. Inc. manufactures snowboards. Its cost of making 3,500 bindings is
as follows:

Suppose O'Brien will sell bindings to Krass for $15 each. Krass will pay $1.50 per unit to transport the bindings to its manufacturing plant, where it will add its own logo at a cost of $0.80 per binding. Krass's accountants predict that purchasing the bindings from O'Brien will enable the company to avoid $5,500 of fixed overhead. Prepare an analysis to show whether Krass should make or buy the bindings.

Question

Krass Snowboard Mfg. Inc. manufactures snowboards. Its cost of making 3,500 bindings is
as follows:
  
Suppose O'Brien will sell bindings to Krass for $15 each. Krass will pay $1.50 per unit to transport the bindings to its manufacturing plant, where it will add its own logo at a cost of $0.80 per binding. Krass's accountants predict that purchasing the bindings from O'Brien will enable the company to avoid $5,500 of fixed overhead. Prepare an analysis to show whether Krass should make or buy the bindings.

Quizplus · Accepted Answer

The Answer of Krass Snowboard Mfg. Inc. manufactures snowboards. Its cost of making 3,500 bindings is
as follows:
  
Suppose O'Brien will sell bindings to Krass for $15 each. Krass will pay $1.50 per unit to transport the bindings to its manufacturing plant, where it will add its own logo at a cost of $0.80 per binding. Krass's accountants predict that purchasing the bindings from O'Brien will enable the company to avoid $5,500 of fixed overhead. Prepare an analysis to show whether Krass should make or buy the bindings.