QUESTION64.
SIEGEAUTO produces seats for the automotive industry. It produces 10,000 units
of the Seat (A) which has a variable unit cost of €150. The fixed production
costs made up of the management of the plant are €200,000. The purchasing
department assumes that, as this product is not strategic, the manufacture of
the seat (A) may be outsourced to a subcontractor who offered to sell it to
SIEGEAUTO at €160 per unit.

In this case, it could reuse the freed-up capacity and produce another
piece of equipment that should generate €150,000 in profit. Should
SIEGEAUTO stop producing Seat (A) in-house?

Question

QUESTION64.
SIEGEAUTO produces seats for the automotive industry. It produces 10,000 units
of the Seat (A) which has a variable unit cost of €150. The fixed production
costs made up of the management of the plant are €200,000. The purchasing
department assumes that, as this product is not strategic, the manufacture of
the seat (A) may be outsourced to a subcontractor who offered to sell it to
SIEGEAUTO at €160 per unit.

In this case, it could reuse the freed-up capacity and produce another
piece of equipment that should generate €150,000 in profit.  Should
SIEGEAUTO stop producing Seat (A) in-house?

Answer

It must continue to produce in-house; The
company earns €100,000

Answer

The company has to outsource the
Seat (A) because the company earns €50,000

Answer

It must continue to produce in-house; The
company earns €50,000

Answer

We lack information to
answer

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QUESTION64. SIEGEAUTO produces seats for the automotive industry. It produces...

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