Scenario: Audio Component Outsourcing

question 44

Multiple Choice

Scenario: Audio Component Outsourcing
Echo Corporation manufactures high-quality audio components, such as speakers, amplifiers, and receivers, for home entertainment systems. Echo has been losing market share in recent years due to the competitive pricing of other audio component manufacturers that engage in outsourcing. Echo managers are attempting to convince Nathan Douglas, the firm's founder and CEO, that outsourcing would enable the firm to be more competitive without sacrificing quality.
-Which of the following should most likely be considered in making the decision to outsource some of Echo's manufacturing activities?

• A) Do purchasing components present the lowest cost option for Echo?
• B) Would Echo engineers be willing to relocate to a foreign nation?
• C) Is Echo prepared to cover moving expenses for its managerial talent?
• D) Can Echo find employees for a customer service center in the U.S.?

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Definitions:

Cost of Goods Sold

The direct costs attributable to the production of goods sold by a company, including materials and labor.

Receivables Balance

Receivables balance refers to the total amount of money owed to a company by its customers for goods or services delivered on credit.

Accounts Receivable Period

The standard timeframe a company needs to gather owed payments from its customers.

Sales

The transactions involving the exchange of goods or services for money, representing the major source of revenue for a business.