Chapter 4, Problem 5P

a

Summary Introduction

Interpretation: Cost incurred to HFC when in house purchasing was done.

Concept Introduction: Cost is the amount incurred for purchasing a product or producing of a good. For producing good, certain amount is paid, the foresaid amount is cost.

b

Summary Introduction

Interpretation:Last year cost of purchasing if HFC used Value-buy.

Concept Introduction: Cost is the amount incurred for purchasing a product or producing of a good. For producing good, certain amount is paid, the foresaid amount is cost.

c

Summary Introduction

Interpretation: Indifference point for the two alternatives.

Concept Introduction: Indifference point is a point where the cost of production is equal in any alternative available.

d

Summary Introduction

Interpretation: Value Buy method to be used or not if 1600 units are to be purchased.

Concept Introduction: Outsourcing is a contract in which a company give its work to another which is responsible for planning, execution and final delivery of work

e

Summary Introduction

Interpretation: Factors to be considered while making outsourcing decision.

Concept Introduction: Outsourcing is a contract in which a company give its work to another which is responsible for planning, execution and final delivery of work