14 Aug accounting to managers discussion
The decision to outsource labor or buy components used in manufacturing from another company affects a wide range of manufacturing, merchandising, and service organizations. For example, a florist can provide payroll processing internally or can hire a third party to provide those services. A product should be made internally if the available costs are less than the additional costs that would be incurred by buying or outsourcing. In this week’s discussion, focus on these concepts by answering the discussion questions presented below.
Please respond to all of the following prompts in the class discussion section of your online course:
Choose a company whose products you use. Explain what type of special order that company’s management might be asked to fill and what factors they might consider in pricing and filling that special order.Assume you are the CEO of the company you chose. What factors would you consider in determining whether you should outsource labor or purchase components used in manufacturing? What do you analyze when making that “make-or–buy” decision?In your experience, where have you seen this make-or-buy decision being made? Explain.
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