ACCOUNTING-201-MODULE-5-CASE

ACCOUNTING-201-MODULE-5-CASE - ACCOUNTING 201 MODULE 5 CASE...

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ACCOUNTING 201 MODULE 5 CASE ASSIGNMENT DR. WENDY ACHILLIES The recommendation to Wally Wizard would be made off the following assumption and best decision making probability. Since the direct material is purchased locally regardless of outsourcing, it would not be relevant to the decision making process. Basically, the costs will be the same for both alternatives and will not be affected by the decision. Under direct labor there may future costs associated with this decision. The decision to hire 100 employees with the possibility of them being laid off and accepting a five year penalty will be relevant. It is difficult to determine the risk because it is not stated how many employees actually works for BMC verses the one hundred for FEE’s proposed plan. The penalty would be $64,000 x 5 years. The risk would be too great because FEE asked for a 2 year contract and if employees are laid off the penalty would last for 5 years. Currently, supervisory labor is $56,000 a month and to outsource would be $62,000 a
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This note was uploaded on 10/26/2011 for the course ACC 201 taught by Professor Garywashington during the Summer '11 term at Trident Technical College.

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ACCOUNTING-201-MODULE-5-CASE - ACCOUNTING 201 MODULE 5 CASE...

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