Quiett Truck Manufactures Part WB23 Used in Several of Its

question 35

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 WB23 is outsourced, 40% of the fixed costs cannot be immediately converted to other uses.Required:
a.Describe avoidable costs.What amount of the WB23 production costs is avoidable?
b.Should Quiett Truck outsource WB23? Why or why not?
c.What qualitative factors should Quiett Truck consider before outsourcing any of the parts it currently manufactures?

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Definitions:

Nonsampling Error

Any difference between the value of a sample statistic (such as the sample mean, sample standard deviation, or sample proportion) and the value of the corresponding population parameter (population mean, population standard deviation, or population proportion) that is not the result of sampling error. These include but are not limited to coverage error, nonresponse error, measurement error, interviewer error, and processing error.

Nonresponse Error

Nonsampling error that results when some segments of the population are either more or less likely to respond to the survey mechanism.

Nonsampling Errors

Errors that occur during data collection, causing data to differ from the true values, not related to the sample being non-representative.

Coverage Error

Nonsampling error that results when the research objective and the population from which the sample is to be drawn are not aligned.