Computing amount of mno production costs is avoidable

Assignment Help Business Management

Reference no: EM1333530

Louder Company manufactures part MNO 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

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

Question 1: What amount of the MNO production costs is avoidable?

Question 2: Should the company outsource MNO? Why or why not?

Question 3: What other items should the company consider before outsourcing any of the parts it currently manufactures?

Reference no: EM1333530

Questions Cloud

Does the source of information make any difference : Does the source of information make any difference to you? If so, how will you rank the reliability of each of the sources listed?

Disadvantages of an overly consultative approach : If engaged as a consultant on organizational/HR issues - how would you specifically advice or coach a manager who had such a tendency?

Mortgage amortization-standard mortgage rates : Consider a standard mortgage (360 months) with monthly payments and the nominal rate (monthly compounding) of 5.70%. What portion of the payments during first 31 months goes toward interest?

Describing the food codex : Briefly describe the main functions of the Codex Alimentarius.

Computing amount of mno production costs is avoidable : What amount of the MNO production costs is avoidable?

Prepare a schedule for human resources : Prepare a calendar (schedule) for human resources for the month of December 2007

Submit an outline that which gives information : Submit an outline that which gives information on your article and the three general economic principles and the three to five macroeconomic indices you will be discussing in your project.

Is the www changing users collectively : Is the WWW changing users collectively or individually in profound or superficial ways? Can we see new cultural values being shaped or sub-cultures being formed that may permanently affect our cultural values.

Explain how might we interpret this statement : Explain how might we interpret this statement in terms of cost curves and revenue curves.

User Account

All Pages