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dec 2010 paper ( contextual features)

KKate9y ago
Dear, sir i got question in in the june 2011 question (Ecocar), There is the need of economic argument for and against outsourcing the question information Ecolite selling price : $7999 variable cost: :4500 weekly demand(cars): 6 production time per car (hrs): 8 production price by outsourcing is $ 3500 Also, It says if outsourcing $1250 overhead costs per week are decreased. delivery cost :$250 each car outsourced and weelkly they produced the 6 cars In the answer if outsourcing, $1000 per car can be reduced compared with variable cost at $4500 and outsourcing production cost $3500. and including the delivery cost it would be $750 savings But i generated the answer as the costs are more than cost savings. cost savings by outsourcing (1000 +1250 ) - cost incurred 1500 *$1000 savings from comparison between variable cost ($4500 )and production cost by outsourcing ( $3500 ) and $1250 as indirect cost saving $1500 cost incurred as delivery cost ( $250x6 cars generated per week) i am not sure that what area does calculate wrongly. and maybe is it that calculation of cost to the each car should be first and weekly cost savings ($1250 )and cost incurred ($1500) should be calculated separately ? Hope to hear soon Thanks for the help! Regards, Kate
kengarrettkengarrettTutor9y ago#1
Have a look at the ACCA technical article on Outsourcing. It reworks the answer to Ecocars and should help.
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