Product outsourcing to Far East Enterprises Limited

In management accounting the premise of relevant costing is applied in order to evaluate business decisions. Such costing premise implies that only incremental costs and revenues pertinent to the decision at hand are considered. Past costs, commonly known as sunk costs and/or unaffected costs are irrelevant to the decision-making process. Therefore the calculations computed in Appendix A of this Report abide with the relevant costing principle noted in this paragraph.

At face value, the agreed price with FEE of $395 per unit is lower than the total manufacturing costs per unit of $425. However, before rushing into any drastic conclusions it is imperative to consider the relevant costs and revenues. Further more, in this case, a particular time frame ought to be set up, because FEE is requesting a two-year contract with the company. Therefore the relevant costs and revenues have to be computed on a two-year basis.

Upon assessment of the incremental costs and revenues on the two year period, it is outlined in Appendix A that an Incremental Loss of $8,929,280 will occur if the company appoints FEE as its supplier for this particular product. Thus it is more financially viable to make the product rather than purchase it from a supplier. The reason behind such a loss mainly rests because the buy decision will be unable to affect the general company overheads, in which a substantial portion is allocated to the GPSN Model.

Place your order
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more