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Category > Business & Finance Posted 08 May 2017 My Price 10.00

Make-or-Buy Decision

Make-or-Buy Decision. Quality Glass currently manufactures windshields for automobiles. Management is interested in outsourcing production of these windshields to a reputable manufacturing company that can supply the windshields for $45 per unit. Quality Glass incurs the following annual production costs to produce 15,000 windshields internally.

If production is outsourced, all variable production costs will be eliminated, and 80 percent of fixed production costs will be eliminated. Regardless of the decision to outsource or to produce internally, 20 percent of fixed production costs will remain .

Required:

a. Perform differential analysis using the format presented in . Assume making windshields internally is Alternative

1, and buying windshields from an outside manufacturer is Alternative 2.

b. Which alternative is best? Explain.

c. Summarize the result of outsourcing production using the format presented in . d. Why might some managers prefer the format presented in requirement c?

Answers

Alpha Geek
(8)
Status NEW Posted 08 May 2017 05:05 PM My Price 10.00

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file 1494263552-Answer.docx preview (271 words )
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