Non-Financial Factors – NBC Institute

PM – Nov 2021 – L2 – Q2 – Decision-Making Techniques

Determine whether to outsource production, calculate indifference price, and evaluate non-financial factors for internal production.

Question

Divine Grace (DG) Limited currently produces “Part-2011” internally but has received an offer from KK Plc to outsource the production. The offer is for 1,000 units at N100 per unit for the next five years. The cost accountant provides the following cost breakdown for internal production of 1,000 units:

Cost Components	Amount (₦)
Direct materials	44,000
Direct production labour	22,000
Variable production overhead	14,000
Depreciation on machine	20,000
Product and process engineering	8,000
Rent	4,000
General overheads	10,000
Total	122,000

Additional information:

The machine used exclusively for “Part 2011” was acquired last year for ₦120,000 and has a useful life of six years with no residual value.
The machine could be sold today for ₦30,000.
Product and process engineering costs will cease after one year if outsourced.
Rent savings from storage use if “Part-2011” production stops is ₦2,000.
General overheads are fixed and not allocated to “Part-2011” if outsourced.
Assume a required rate of return of 12%.

Required:
a. Should DG Limited outsource “Part 2011”? (10 Marks)
b. What maximum price should KK Plc quote for 1,000 units to make DG indifferent between outsourcing and internal production? (5 Marks)
c. What non-financial factors would favor internal production over outsourcing? (5 Marks)

Answer

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Tags: Fixed Costs, Make or buy decision, Non-Financial Factors, Outsourcing, Penalty, Pricing, Variable Costs
Level: Level 2

Topic: Decision-making techniques
Series: NOV 2021

SCS – Dec 2022 – L3 – Q4a – Strategy implementation

Evaluate non-financial factors affecting TCWL’s strategic expansion using Johnson and Scholes’ model.

Question

TCWL plans to expand to Kenya and South Africa to produce for Eastern and Southern Africa markets respectively. This move is largely influenced by the Africa Continental Free Trade Agreement (AfCFTA) which was launched in July 2020. This strategic direction would require substantial investments to upgrade production facilities to meet the new market demand.

Required:

Using Johnson and Scholes suitability/feasibility/acceptability model, evaluate the non-financial factors that could influence the success of this strategic decision. (10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: AfCFTA, expansion, Johnson and Scholes, Non-Financial Factors, Strategic Decision-Making
Level: Level 3

Topic: Strategy implementation
Series: DEC 2022

MA – May 2018 – L2 – Decision Making Techniques

Discuss non-financial factors to consider when deciding whether to outsource.

Question

Explain THREE non-financial factors PieceJoz FM should also consider when making the decision to outsource.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Non-Financial Factors, Outsourcing, Strategic Decision-Making
Level: Level 2

Topic: Decision making techniques
Series: MAY 2018

MA – Nov 2021 – L2 – Q4b – Discounted Cash Flow

Discuss non-financial factors that Bee Ltd should consider before outsourcing production.

Question

b) Bee Ltd could outsource the production of Ohenewa to an overseas manufacturer. The Accountant has presented figures to show that the NPV of the project based on outsourcing the production is GH¢0.5 million higher than the positive NPV of in-house production.

Required:
Explain THREE (3) non-financial factors that Bee Ltd would need to consider before making the decision either to outsource or produce in-house. (3 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Decision Making, Non-Financial Factors, Outsourcing, Quality, Reliability
Level: Level 2

Topic: Discounted cash flow
Series: NOV 2021

PM – Nov 2021 – L2 – Q2 – Decision-Making Techniques

Determine whether to outsource production, calculate indifference price, and evaluate non-financial factors for internal production.

Question

Cost Components	Amount (₦)
Direct materials	44,000
Direct production labour	22,000
Variable production overhead	14,000
Depreciation on machine	20,000
Product and process engineering	8,000
Rent	4,000
General overheads	10,000
Total	122,000

Additional information:

The machine used exclusively for “Part 2011” was acquired last year for ₦120,000 and has a useful life of six years with no residual value.
The machine could be sold today for ₦30,000.
Product and process engineering costs will cease after one year if outsourced.
Rent savings from storage use if “Part-2011” production stops is ₦2,000.
General overheads are fixed and not allocated to “Part-2011” if outsourced.
Assume a required rate of return of 12%.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Fixed Costs, Make or buy decision, Non-Financial Factors, Outsourcing, Penalty, Pricing, Variable Costs
Level: Level 2

Topic: Decision-making techniques
Series: NOV 2021

SCS – Dec 2022 – L3 – Q4a – Strategy implementation

Evaluate non-financial factors affecting TCWL’s strategic expansion using Johnson and Scholes’ model.

Question

Required:

Using Johnson and Scholes suitability/feasibility/acceptability model, evaluate the non-financial factors that could influence the success of this strategic decision. (10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: AfCFTA, expansion, Johnson and Scholes, Non-Financial Factors, Strategic Decision-Making
Level: Level 3

Topic: Strategy implementation
Series: DEC 2022

MA – May 2018 – L2 – Decision Making Techniques

Discuss non-financial factors to consider when deciding whether to outsource.

Question

Explain THREE non-financial factors PieceJoz FM should also consider when making the decision to outsource.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Non-Financial Factors, Outsourcing, Strategic Decision-Making
Level: Level 2

Topic: Decision making techniques
Series: MAY 2018

MA – Nov 2021 – L2 – Q4b – Discounted Cash Flow

Discuss non-financial factors that Bee Ltd should consider before outsourcing production.

Question

Required:
Explain THREE (3) non-financial factors that Bee Ltd would need to consider before making the decision either to outsource or produce in-house. (3 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Decision Making, Non-Financial Factors, Outsourcing, Quality, Reliability
Level: Level 2

Topic: Discounted cash flow
Series: NOV 2021

Question Tag: Non-Financial Factors

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PM – Nov 2021 – L2 – Q2 – Decision-Making Techniques

Determine whether to outsource production, calculate indifference price, and evaluate non-financial factors for internal production.

SCS – Dec 2022 – L3 – Q4a – Strategy implementation

Evaluate non-financial factors affecting TCWL’s strategic expansion using Johnson and Scholes’ model.

MA – May 2018 – L2 – Decision Making Techniques

Discuss non-financial factors to consider when deciding whether to outsource.

MA – Nov 2021 – L2 – Q4b – Discounted Cash Flow

Discuss non-financial factors that Bee Ltd should consider before outsourcing production.

PM – Nov 2021 – L2 – Q2 – Decision-Making Techniques

Determine whether to outsource production, calculate indifference price, and evaluate non-financial factors for internal production.

SCS – Dec 2022 – L3 – Q4a – Strategy implementation

Evaluate non-financial factors affecting TCWL’s strategic expansion using Johnson and Scholes’ model.

MA – May 2018 – L2 – Decision Making Techniques

Discuss non-financial factors to consider when deciding whether to outsource.

MA – Nov 2021 – L2 – Q4b – Discounted Cash Flow

Discuss non-financial factors that Bee Ltd should consider before outsourcing production.

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PM – Nov 2021 – L2 – Q2 – Decision-Making Techniques

Determine whether to outsource production, calculate indifference price, and evaluate non-financial factors for internal production.

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SCS – Dec 2022 – L3 – Q4a – Strategy implementation

Evaluate non-financial factors affecting TCWL’s strategic expansion using Johnson and Scholes’ model.

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MA – May 2018 – L2 – Decision Making Techniques

Discuss non-financial factors to consider when deciding whether to outsource.

You're reporting an error for "MA – May 2018 – L2 – Decision Making Techniques"

MA – Nov 2021 – L2 – Q4b – Discounted Cash Flow

Discuss non-financial factors that Bee Ltd should consider before outsourcing production.

You're reporting an error for "MA – Nov 2021 – L2 – Q4b – Discounted Cash Flow"

PM – Nov 2021 – L2 – Q2 – Decision-Making Techniques

Determine whether to outsource production, calculate indifference price, and evaluate non-financial factors for internal production.

You're reporting an error for "PM – Nov 2021 – L2 – Q2 – Decision-Making Techniques"

SCS – Dec 2022 – L3 – Q4a – Strategy implementation

Evaluate non-financial factors affecting TCWL’s strategic expansion using Johnson and Scholes’ model.

You're reporting an error for "SCS – Dec 2022 – L3 – Q4a – Strategy implementation"

MA – May 2018 – L2 – Decision Making Techniques

Discuss non-financial factors to consider when deciding whether to outsource.

You're reporting an error for "MA – May 2018 – L2 – Decision Making Techniques"

MA – Nov 2021 – L2 – Q4b – Discounted Cash Flow

Discuss non-financial factors that Bee Ltd should consider before outsourcing production.

You're reporting an error for "MA – Nov 2021 – L2 – Q4b – Discounted Cash Flow"

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Customer

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