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Tactical Decision Making. PROBLEM 19.45 (40 minutes) Outsourcing decision;
relevant costs; ethics: manufacturer 1. (a) An analysis ...
... Operational ? These are everyday decisions, used to support tactical decisions ...
Application When using critical thinking and decision making techniques one must ...
... b) Tactical decision. ... 9 Step Decision Making Process This form of decision making
process involves well researched alternatives being implemented to solve a ...
... b) Tactical decision. ... 9 Step Decision Making Process This form of decision making
process involves well researched alternatives being implemented to solve a ...
... b) Tactical decision. ... 9 Step Decision Making Process This form of decision making
process involves well researched alternatives being implemented to solve a ...
Submitted by tyron100 on April 14, 2008
Category: Business
Words: 754 | Pages: 4
Views: 166
Popularity Rank: 72,915
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PROBLEM 19.45 (40 minutes) Outsourcing decision; relevant costs; ethics: manufacturer
1. (a) An analysis of the relevant costs that shows whether the Victorian Division of HMC should make JY-65 or purchase it from Marley Company is as follows:
Amount
per unit
Total for
32 000 units
Cost to purchase JY-65 from Marley:
Bid price from Marley
$8.65
276 800
Equipment lease penalty ($18 000/12) 2
3 000
Total cost to purchase
$279 800
Cost for Victorian to make JY-65:
Direct material ($97 500/30 000) 1.08
$3.51
$112 320
Direct labour ($60 000/30 000) 1.05
2.10
67 200
Variable manufacturing overhead ($112 500 .4)/30 000
1.50
48 000
Factory space rental
42 000
Equipment leasing costs
18 000
Total cost to make
$287 520
Cost savings if purchased from Marley
$ (7 720)
(b) Based solely on the financial results, the 32 000 units of JY-65 should be purchased from Marley. The total cost from Marley would be $279 800, or $7720 less than if the units were made by the Victorian Division.
2. The qualitative factors that the Victorian Division and HMC Corporation should consider before agreeing to purchase JY-65 from Marley Company include the following:
• The quality of the Marley component should be equal to, or better than, the quality of the internally made component, or else the quality of the final product might be compromised and HMC’s reputation adversely affected.
• Marley’s reliability as an on-time supplier is important, since late deliveries could hamper HMC’s production schedule and...
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