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Quiet 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 labor 15,000
Variable support costs 35,000
Fixed support costs 25,000
Total costs $120,000
Question a. Describe avoidable costs. What amount of the part WB23's production costs is avoidable?
Question b. Should Quiet Truck outsource part WB23? Why or why not?
Question c. What other items should Quiett Truck consider before outsourcing any of the parts it currently manufactures?
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