Asked by Nefetiti Easter on Jul 17, 2024
Verified
If Melbourne decides to purchase the subcomponent from the outside supplier, the annual financial advantage (disadvantage) would be:
A) $120,000
B) $20,000
C) ($120,000)
D) ($20,000)
Annual Financial Advantage
The financial benefits or savings realized by a company over the course of a year, often resulting from efficiencies, investments, or strategic decisions.
Outside Supplier
A third-party company that provides goods or services to another company, as opposed to the company producing these items in-house.
Purchase Subcomponent
The act of buying parts or elements that will be used to assemble a final product.
- Grasp the theory of make-or-buy choices and their repercussions on economic results.
- Determine pertinent expenses for decisions on whether to manufacture in-house or procure externally and for unique order considerations.
Verified Answer
Purchasing the part would result in $120,000 higher cost.
Learning Objectives
- Grasp the theory of make-or-buy choices and their repercussions on economic results.
- Determine pertinent expenses for decisions on whether to manufacture in-house or procure externally and for unique order considerations.
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