Sing Manufacturing Company is considering an opportunity to outsource a four function calculator that the Company currently makes and sales. Even if the calculator is outsourced, Sing plans to continue to sell it. Also, Sing plans to continue production on other calculator models that are currently being made by the Company. The costs associated with making the four function calculators include unit-level materials, labor, and overhead. In addition, there is some facility-level overhead costs that are allocated to the product. Sing pays a 5% salcs commission on each calculator sold. Based on this information, indicate which of the following statements is false. a. The materials cost is relevant to the outsourcing decision. b. The facility-level overhead cost is not relevant to the outsourcing decision. C. The sales commission is relevant to the outsourcing decision. d. It may be wise for Sing to continue to manufacture the four function calculator even if the relevant cost of buying it is less than the relevant cost of making it.
please explain why the option is false and other options true in detail with full explanation
Sing Manufacturing Company is considering an opportunity to outsource a four function
calculator that the Company currently makes and sales. Even if the calculator is outsourced,
Sing plans to continue to sell it. Also, Sing plans to continue production on other calculator
models that are currently being made by the Company. The costs associated with making the
four function calculators include unit-level materials, labor, and
is some facility-level overhead costs that are allocated to the product. Sing pays a 5% salcs
commission on each calculator sold. Based on this information, indicate which of the
following statements is false.
a. The materials cost is relevant to the outsourcing decision.
b. The facility-level overhead cost is not relevant to the outsourcing decision.
C. The sales commission is relevant to the outsourcing decision.
d. It may be wise for Sing to continue to manufacture the four function calculator even if the
relevant cost of buying it is less than the relevant cost of making it.
please explain why the option is correct and other false in detail with full explanation
Furman Enterprises, Inc. makes boat docks. A standard dock includes unit-level materials,
labor, and overhead cost. In addition, the company incurs product-level engineering and
advertising costs. The sales staff is paid a 10% commission on each dock sold. A sales
person has located a land developer who is willing to purchase 12 docks only if he can buy
them at an amount that is below Furman's current sales price. Which of the following costs
would not be relevant to this special order decision?
A. The unit-level materials, labor, and overhead costs.
b. The sales commissions.
c. The product-level engineering and advertising costs.
d. a and b.
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