Quiett Truck Manufactures Part WB23 Used in Several of Its

question 48

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:
$\begin{array}{lr}\text { Direct materials } & \$ 45,000 \\\text { Direct manufacturing labor } & 15,000 \\\text { Variable support costs } & 35,000 \\\text { Fixed support costs } & 25,000 \\\text { Total costs }&\$120,000\end{array}$ 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.
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 other items should Quiett Truck consider before outsourcing any of the parts it currently manufactures?

---

Definitions:

Reality Orientation

Therapeutic modality for restoring an individual's sense of the present.

Psychosocial Change

Adjustments in a person's psychological and social situation, often resulting from or leading to altered interactions with others, self-perception, and coping strategies.

Social Isolation

A state in which an individual lacks a sense of belonging socially, lacks engagement with others, and has a minimal number of social contacts, often leading to negative health outcomes.

Reminiscence

Recalling the past to assign new meaning to past experiences.