Decision Making and Relevant Costs at Honda

Requirements:

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

Option	Relevant Costs ($)
In-House Production	20,000,000
Outsourcing	15,000,000

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