ACCT 203 Managerial accounting help
Tesla, Inc. is deciding whether to outsource the production of a steering wheel that is included in all of its products. It currently costs Tesla $4.20 to make each steering wheel in-house. If Tesla outsources, it can buy the steering wheel ready-made for $3.90 each and can shut down the production facilities it is currently using to manufacture the steering wheel and save $20,000 a year in fixed costs. Annual requirement for the steering wheel is 12,000 units. What is the effect of outsourcing?
How much to make?
How much to buy?
Should they outsource?
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