Decision Making and Relevant Costs at Honda

Requirements:

1. Use relevant costing techniques at Honda to make a decision on manufacturing component parts internally or outsourcing.

Option	Relevant Costs ($)
In-House Production	20,000,000
Outsourcing Production	18,000,000

• Analyze the relevant costs and benefits of producing component parts in-house versus outsourcing for Honda's production facilities.
• Evaluate the qualitative factors that Honda should consider when making the production decision.
• Recommend the most cost-effective option based on relevant costing analysis for Honda's component parts production.