Victoria Co. manufactures part K1 used in several of its truck models. 1,000 units are produced each year with production costs as follows: Direct materials $ 70,000 Direct manufacturing labor 50,000 Variable support costs 40,000 Fixed support costs 80,000 Total costs $240,000 The company has the option of purchasing part K1 from an outside supplier at $200 per unit. If X12 is outsourced, 30% of the fixed costs cannot be immediately converted to other uses. Required:

a. Describe avoidable costs. What amount of the K1 production costs is avoidable? Show your work (i.e., formula and computation) .

b. Should the company outsource K1? Why or why not? Explain. Show your work (i.e., formula and computation) . c. What other items should the company consider before outsourcing any of the parts it currently manufactures? List at least three and explain