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Direct materials $ 45000Direct manufacturing labor 15000Variable support costs 3
Machine-hours Kilowatt-hours Total Overhead CostsJanuary 3800 4520000 $138000Feb
September 15, 20201. Issued 20000 shares of $10 par common stock at par. 2. Issued 2000 shares of
September 15, 2020Direct materials $ 45000Direct manufacturing labor 15000Variable support costs 35000Fixed support costs 25000Total costs $120000Louder
Company has the option of purchasing part MNO from an outside supplier
at $11.20 per unit. If MNO is outsourced 40% of the fixed costs cannot
be immediately converted to other uses.Question 1: What amount of the MNO production costs is avoidable?Question 2: Should the company outsource MNO? Why or why not?Question 3: What other items should the company consider before outsourcing any of the parts it manufactures?
