ABC company has the following information:

Manufacturing cost:

• Direct material: $45,000
• Direct labour: $18,000
• Variable overhead cost: $12,500
• Fixed overhead cost: $49,500
• Quantity produced and sold: 250,000

ABC received an offer to outsource their production with the following information:

• The full fixed cost will be avoided.
• Purchase price per quantity is $0.50.

In addition, 3 employees must be laid off if production is outsourced.

Calculate the total cost per product if not outsourced

Question 39 options:

	$0.30
	$0.50
	$0.60
	$0.45

Question 40 (1 point)

ABC company has the following information:

Manufacturing cost:

• Direct material: $45,000
• Direct labour: $18,000
• Variable overhead cost: $12,500
• Fixed overhead cost: $49,500
• Quantity produced and sold: 250,000

ABC received an offer to outsource their production with the following information:

• The full fixed cost will be avoided.
• Purchase price per quantity is $0.50.

In addition, 3 employees must be laid off if production is outsourced.

Should ABC receive or reject the offer and why?

Question 40 options:

	No... Because cost per quantity will increase if production is outsourced.
	Yes... Because cost per quantity will decrease if production is outsourced.
	No... Because the change in cost per unit will be insignificant and 3 employees will be laid off.
	No... Because the cost per unit will remain the same and 3 employees will be laid off.