Question: Question 2 Thunder Company is considering outsourcing a key component. A reliable supplier has quoted a price of RM755.00 per unit. The following costs of

Question 2 Thunder Company is considering outsourcing a key component. A

Question 2 Thunder Company is considering outsourcing a key component. A reliable supplier has quoted a price of RM755.00 per unit. The following costs of the component when manufactured in-house are expressed on a per unit basis: In addition, Thunder Company incurs fixed overhead at a total cost of RM150,000. The company is currently manufacturing in-house and selling 1500 units of the component. a. What assumptions need to be made about the behaviour of overhead costs for Thunder in order to analyse the outsourcing decision? (5 marks) b. Should Thunder Company consider outsourcing the component? Please show any relevant calculations and justify your opinion. (20 marks) c. What other factors are relevant for this decision

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!

Q:

Question 2 Thunder Company is considering outsourcing a key component. A reliable supplier has quoted a price of RM 7 5 5 . 0 0 per unit. The following costs of the component when manufactured in -...

Q:

Question 2 Thunder Company is considering outsourcing a key component. A reliable supplier has quoted a price of RM 7 5 5 . 0 0 per unit. The following costs of the component when manufactured in -...

Q:

Question 2 Thunder Company is considering outsourcing a key component. A reliable supplier has quoted a price of RM 7 5 5 . 0 0 per unit. The following costs of the component when manufactured in -...

Q:

Question 5: Kane Company is considering outsourcing a key component. A reliable supplier has quoted a price of $64.50 per unit. The following costs of the component when manufactured in-house are...

Q:

Question 5: Kane Company is considering outsourcing a key component. A reliable supplier has quoted a price of $64.50 per unit. The following costs of the component when manufactured in-house are...

Q:

Question 5: Kane Company is considering outsourcing a key component. A reliable supplier has quoted a price of $64.50 per unit. The following costs of the component when manufactured in-house are...

Q:

Keara Company is considering outsourcing a key component A reliable supplier has quoted a price of $60.00 per unit. The following costs of the component when manufactured in-house are expressed on a...

Q:

Kyle Company is considering outsourcing a key component. A reliable supplier has quoted a price of $65.00 per unit. The following costs of the component when manufactured in-house are expressed on a...

Q:

Company is considering outsourcing a key component. A reliable supplier has quoted a price of $65.00 per unit. The following costs of the component when manufactured in-house are expressed on a per...

Q:

Company is considering outsourcing a key component. A reliable supplier has quoted a price of $63.50 per unit. The following costs of the component when manufactured in-house are expressed on a per...

Q:

6) Using the following hypothetical information taken from the balance sheet and income statement for ACME Corp., develop Asset Turnover, Return on Assets and GMROI Sales $478,000,000 310,700,000...

Q:

Plum Bhd. (Plum) is a sole distributor in Malaysia for the manufacturing machineries under the brand name Hilos. The financial statements of Plum Bhd. for the year ended 31 March 2021 were approved...

Q:

When an accountant compiles the financial statements of a nonissuer in accordance with Statements on Standards for Accounting and Review Services, the accountant s report should include: A . A...

Q:

struct Matrix3 { int mat[9]; }; struct Vector3 { result = {0, 0, 0}; int vec[3]; }; void matmul(Vector3 &result, const Matrix3 &mat, const Vector3 &vec) { for (int t0 = 0; t0