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Quiett Truck manufactures part WB23 used in several of its truck models. 10,000 units are produced e

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Quiett Truck manufactures part WB23 used in several of its truck models. 10,000 units are produced e

Quiett Truck manufactures part WB23 used in several of its truck models. 10,000 units are produced each year with production costs as follows:

   Direct materials   $ 45,000
   Direct manufacturing labor   15,000
   Variable support costs   35,000
   Fixed support costs   25,000
   Total costs   $120,000

Quiett Truck has the option of purchasing part WB23 from an outside supplier at $11.20 per unit. If WB23 is outsourced, 40% of the fixed costs cannot be immediately converted to other uses.

a.   Describe avoidable costs. What amount of the WB23 production costs is avoidable?
b.   Should Quiett Truck outsource WB23? Why or why not?
c.   What other items should Quiett Truck consider before outsourcing any of the parts it currently manufactures?

Textbook

Cost Accounting

Edition: 14^th

Authors: Horngren, Datar, Rajan

Read 1424 times

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jerico Author

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9 years ago

I can confidently say that it looks and sounds right lol Thank you Slight Smile

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cyborg

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9 years ago

Sweet, you're welcome.

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master H.

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4 years ago

thx

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Rafał S.

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4 years ago

thanks!

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Onur B.

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3 years ago

thankssss!

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Tamere

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Thank you

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BA123

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3 years ago

thanks!

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Mohammed A.

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3 years ago

thanks

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