Easton Company makes and sells scooters. Easton incurred the following costs in its most recent fiscal year: Easton can currently purchase the scooters it makes from Weston Company. If the company purchases the scooters, Easton would still continue to use its own logo, sales staff, and advertising programs. If Easton outsources the scooters to Weston, which of the following costs would be relevant to the outsourcing decision?

Question

Easton Company makes and sells scooters. Easton incurred the following costs in its most recent fiscal year:  Easton can currently purchase the scooters it makes from Weston Company. If the company purchases the scooters, Easton would still continue to use its own logo, sales staff, and advertising programs. If Easton outsources the scooters to Weston, which of the following costs would be relevant to the outsourcing decision?

Quizplus · Accepted Answer

If Easton outsources the scooters, all of the costs listed (materials, shipping and handling, and inspection) would still be relevant to the outsourcing decision. These costs would need to be compared to the cost savings of outsourcing to determine if it is financially beneficial for Easton to purchase the scooters from Weston.

Easton Company Makes and Sells Scooters