A company truck manufactures part MZ30 used in several of its truck models. 10,000 units are produced each year with production costs as follows:

Direct materials	$ 45,000
Direct labor	15,000
Variable support costs	35,000
Fixed support costs	25,000
Total costs	$120,000

The company truck has the option of purchasing part MZ30 from an outside supplier at $11.20 per unit. If part MZ30 is outsourced, 40% of the fixed costs cannot be immediately converted to other uses.

Instructions:

1. Describe avoidable costs. What amount of the part MZ30's production costs is avoidable?
2. Should The company Truck outsource part MZ30? Why or why not? Explain your answer?
3. What other items should The company Truck consider before outsourcing any of the parts it currently manufactures?