Quiett Truck Manufactures Part WB23 Used in Several of Its

question 7

Essay

Quiett Truck manufactures part WB23 used in several of its truck models.10,000 units are produced each year with production costs as follows:

Quiett Truck has the option of purchasing part WB23 from an outside supplier at $11.20 per unit.If part WB23 is outsourced,40% of the fixed costs cannot be immediately converted to other uses.
Required:
a. Describe avoidable costs.What amount of the part WB23's production costs is avoidable?
b. Should Quiett Truck outsource part WB23? Why or why not?
c. What other items should Quiett Truck consider before outsourcing any of the parts it currently manufactures?

Understand the role of a job cost sheet in a job order costing system.

Compute the predetermined overhead rate using different estimates and actual costs.

Understand the allocation of overhead costs in product costing.

Recognize the importance of accurately calculating and applying overhead costs in product pricing and profitability analysis.

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Definitions:

Management By Exception

A management strategy where leaders intervene only when necessary, mainly when there are deviations from expected outcomes; it emphasizes autonomy in the regular tasks.

Positive Reinforcement

A technique in behavior analysis that involves the addition of a stimulus following a desired behavior, increasing the likelihood of that behavior occurring again.

Negative Reinforcement

A behavioral concept where the removal of an unpleasant stimulus strengthens a desired behavior.

Full Range Leadership Model

A leadership model that suggests leaders can operate across a spectrum of behavioral tactics, from laissez-faire to transformational leadership strategies.