Question 13

1. Daily Kneads, Inc., is thinking about having one of its products made by a supplier. The supplier will charge $6,000 for 1,000 units. Currently, Daily Kneads' costs to make 1,000 units of this product are as follows:

   	Cost per unit	Cost of 1,000 units
   Direct labor	$4	$4,000
   Direct materials	$1	$1,000
   Allocated unavoidble overhead	$2	$2,000
   Total costs	$7	$7,000

   Should the product be outsourced?

   		Yes
   		No