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 a company decides to outsource, it can avoid the unit-level costs (materials, labor, overhead), the batch-level costs (assembly setup and materials handling), and product-level costs. Deciding to outsource will not, however, affect the facility-level costs.

Easton Company Makes and Sells Scooters