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  • ASS12 - Tactical - Baskoro Saputra - 0076

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    Baskoro Saputra
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    The document presents two alternatives for a company: make a component in-house at a cost of $7.00 per unit, or purchase it from a supplier for $6.50 per unit. Based on an annual production of 20,000 units, making the component in-house would decrease operating income by $27,000, while purchasing it would increase operating income by $10,000. Therefore, the company should purchase the component from the supplier to increase profits.

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    ASS12_tactical_Baskoro Saputra_0076

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    The document presents two alternatives for a company: make a component in-house at a cost of $7.00 per unit, or purchase it from a supplier for $6.50 per unit. Based on an annual production of 20,000 units, making the component in-house would decrease operating income by $27,000, while purchasing it would increase operating income by $10,000. Therefore, the company should purchase the component from the supplier to increase profits.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    11 views1 page

    ASS12 - Tactical - Baskoro Saputra - 0076

    Uploaded by

    Baskoro Saputra
    The document presents two alternatives for a company: make a component in-house at a cost of $7.00 per unit, or purchase it from a supplier for $6.50 per unit. Based on an annual production of 20,000 units, making the component in-house would decrease operating income by $27,000, while purchasing it would increase operating income by $10,000. Therefore, the company should purchase the component from the supplier to increase profits.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    of 1

    1.

    The two alternatives are to make the component in house or to buy it from the outside


    supplier.

    2.
    Alternatives Differential
    Make Buy Cost to Make
    $2.95 - $2.95
    0.40 - 0.40
    1.80 - 1.80
    - $6.50 (6.50)
    $5.15 $6.50 $(1.35)

    = Chesbrough should make the component in house because operating income will decrease by
    $27,000 ($1.35 × 20,000) if it is purchased from Berham Elec-tronics.

    Alternatives Differential
    Make Buy Cost to Make
    $2.95 - $2.95
    0.40 - 0.40
    1.80 - 1.80
    1.85 - 1.85
    - $6.50 (6.50)
    $7.00 $6.50 $(0.50)

    = Chesbrough should purchase the component from Berham Electronics be-cause operating income


    will increase by $10,000 ($0.50 × 20,000)

    Baskoro Saputra Rahman


    14030120190076
    IUP 22

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