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The company that you are working at is looking for new ways to reduce cost. Mr. Kadi, the owner of the company, carried out
The company that you are working at is looking for new ways to reduce cost. Mr. Kadi, the owner of the company, carried out the following actions. a. Outsource one component part rather than manufacture the part in-house. b. Discussing with you and other employees the possibility of outsourcing the component part to maximise the manufacturing capacity to produce higher yield output. c. Learning of a new cost saving production method. d. Comparing the expected cost of outsourcing to the expected cost of producing in-house and estimates cost and benefits from both alternatives. e. Estimating that outsourcing will save manufacturing time by 15%. f. Researching the price of outsourcing online. Required: As the expert in the area of the five-step decision-making process, you are required to help the owner in the decision-making by categorizing the items of a-f above according to the five-step decision-making process that you learned in your Management Accounting course.
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