Which alternative is more attractive to Terry Inc, make or buy the machine parts? 4. What strategic considerations likely bear on this make vs buy decision?
Terry Inc. manufactures machine parts for aircraft engines. CEO Bucky Walters is considering an offer from a subcontractor to provide 2,000 units of product OP89 for $120,000. If Terry does not purchase these parts from the subcontractor, it must continue to produce them in-house with these costs:
Cost per unit
($)
Direct Materials 28
Direct Labor 18
Variable
Allocated Fixed Overhead 4
Required
3. Which alternative is more attractive to Terry Inc, make or buy the machine parts?
4. What strategic considerations likely bear on this make vs buy decision? (at least 2 considerations)
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