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mybusinesscourse.com/platform/mod/quiz/attempt.php?attempt-18117688(page-7 Menu ASSIGNM QUESTION 8 Not complete Points out of 1.00 P Flag question Outsourcing (Make-or-Buy) Decision 6 17 Assume a division of Hewlett-Packard currently makes 10,000 circuit boards per year used in producing diagnostic electronic instruments at a cost of $36 per board, consisting of variable costs per unit of $24 and fixed costs per unit of $12. Further assume Sanmina Corporation offers to sell Hewlett-Packard the 10.000 circuit boards for $36 each. If Hewlett-Packard accepts this offer. the facilities currently used to make the boards could be rented to one of Hewlett-Packard's suppliers for $30.000 per year. in addition. $5 per unit of the fixed overhead applied to the circuit boards would be totally eliminated Finish atte Should HP outsource this component from Sanmina Corporation? Calculate the net advantage (disadvantage) to HP of outsourcing the component from Samina Corporation. Use a negative sign with your answer to indicate a net disadvantage. if appropriate. Check Finish attempt.. Save Answers Previous page F10 F11 F12 F9 F5

Explanation / Answer

Net Financial advantage/(disadvantage) Make Outsource Net Increase/(decrease) in income Variable cost of manufacture 240000 0 240000 Fixed cost of manufacture 120000 70000 50000 Variable cost of Supplier 360000 -360000 Contribution earned fro renting out -30000 30000 Net Financial disadvantage 360,000 400,000 -40000 No, The product shall not be outsourced. The Net financial disadvantage shall be: ($40,000)

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