If the Company Does Not Have Specialised Knowledge in the Production

question 8

Multiple Choice

If the company does not have specialised knowledge in the production of the product.

• A) Explore outsourcing this activity
• B) Explore keeping this activity in-house

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Definitions:

Fixed Cost

Costs that do not vary with the production volume or level of services provided, such as rent, salaries, and insurance.

Salary

Salary refers to a fixed regular payment, typically paid on a monthly or biweekly basis but often expressed as an annual sum, made by an employer to an employee.

Incremental Manufacturing Cost

The additional cost incurred to produce an extra unit of a product, reflecting only those costs that directly change with the level of production.

Production

Production involves the processes and methods used to transform raw materials or components into finished goods or services.