Fun Play Global Sourcing (Scenario)

question 54

Multiple Choice

Fun Play Global Sourcing (Scenario)
Fun Play Inc., a company manufacturing toys for children, has decided to outsource some of its value-chain activities. However, the firm has no experience with global sourcing and has hired a consulting firm to assist its managers. The consulting firm has been assigned the task of determining which activities should be outsourced and where the outsourced activities should be located.
-Which of the following is most likely to be the consultants' utmost concern while deciding if clothing for Fun Play dolls needs to be outsourced?

• A) Is doll clothing part of Fun Play's core competencies?
• B) What kind of fabric is used for clothing Fun Play dolls?
• C) Do the competitors of Fun Play outsource accounting activities abroad?
• D) Does Fun Play intend to follow a strategy of product diversification in the near future?

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Definitions:

Fixed Overhead

Costs that do not vary with the level of production or sales, including rent, salaries, and insurance, which are incurred regardless of the business activity level.

Work In Process

Goods that are in various stages of the production process but are not yet completed products.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead to individual products or job orders based on a specific activity base.

Direct Labor-hours

The total number of work hours directly spent on manufacturing a product.