Author Question: H.J. Manufacturing produces 10,000 units of a part that is used in their assembly process. The ... (Read 65 times)

s.tung · **on:** Mar 6, 2021

Question 1

Variable cost per unit is the best product cost to use for one-time-only special order decisions.
◦ true
◦ false

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 labor

20,000

Variable support costs

35,000

Fixed support costs

25,000

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?

wilsonbho · **Reply #1 on:** Mar 6, 2021

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