MGT 5 Lecture Notes - Lecture 3: Fixed Cost, Outsourcing
12 Oct 2018
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**total manufacturing costs doesn"t include beg wip, total of add rm, dl, ol. Things too small to track: glue, misc nuts and bolts. When 25% increase from ,000 at 22,000 units, then it goes to ,000 (total fixed cost) When there"s nothing saying that the fc increases, assume it stays the same and divide by the total number of units to get the new fc/ Fc are a pain in the butt. Since they are stable, they are a problem for manufacturers/businesses that are just starting out. Some people can"t afford to lose that money. Outsourcing manufacturing increases variable costs temporarily, but decreases. Is = inside (manufactured by the parent company) Vc goes up because you are now being charged to use someone else"s machinery to create your goods (you also have to pay for your own materials) Fc goes down because you can downsize your production facility.
