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

a.   Avoidable costs are those costs eliminated when a part, product, product line, or business segmented is discontinued. Avoidable production costs for WB23 total $110,000, which are all but the $10,000 ($25,000 × 40%) of fixed costs that cannot be immediately converted to other uses.

b.   Based on the financial considerations given, Quiett Truck should NOT outsource WB23 because the $112,000 (10,000 units × $11.20 per part) outsourced cost is greater than the $110,000 reduction in annual production costs. In other words, the outsourcing would cost Quiett Truck an additional $2,000 annually.

c.   Other factors to consider include the supplier's ability to meet expected quality and delivery standards, and the likelihood of suppliers increasing prices of components in the future.

I see. Hmm...

Thanks for confirming, will mark this solved.