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Author Question: H.J. Manufacturing produces 10,000 units of a part that is used in their assembly process. The ... (Read 93 times)

s.tung

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on: Mar 6, 2021

Question 1

Variable cost per unit is the best product cost to use for one-time-only special order decisions.
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Question 2

H.J. Manufacturing produces 10,000 units of a part that is used in their assembly process. The production costs are as follows:

Direct materials$ 50,000
Direct manufacturing labor20,000
Variable support costs35,000
Fixed support costs25,000
Total costs$130,000

H.J. Manufacturing has the option of purchasing these units from an outside supplier at $10.75 per unit. If the part is outsourced, 40% of the fixed costs cannot be immediately converted to other uses. 

a.  Describe avoidable costs. What amount of the part's production costs is avoidable? 
b.  Should H.J. outsource the part? Why or why not? 
c.  What other items should H.J. consider before outsourcing any of the parts it currently manufactures?
Horngren's Cost Accounting: A Managerial Emphasis ¦ Datar, Rajan ¦ 16th Edition
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Marked as best answer by s.tung on Mar 6, 2021

wilsonbho

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Reply #1 on: Mar 6, 2021
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s.tung

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Reply 2 on: Mar 6, 2021
Excellent

LVPMS

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Reply 3 on: Yesterday
Gracias!

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