Busby Company Needs 10,000 Units of a Certain Part to Use

question 16

Essay

Busby Company needs 10,000 units of a certain part to use in its production cycle. The following information is available: If Busby buys the part from Thurco instead of making it, Busby could not use the released facilities in another manufacturing activity. However, twenty percent of the fixed overhead would be avoided because one of the supervisors could be let go.
(a) In deciding whether to make or buy the part, what are the relevant costs that Busby must consider.
(b) What decision should Busby make?

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Definitions:

EMDR

Eye Movement Desensitization and Reprocessing, a psychotherapy treatment designed to alleviate the distress associated with traumatic memories.

Anxiety

Anxiety is an emotion characterized by feelings of tension, worried thoughts, and physical changes like increased blood pressure, stemming from anticipation of future distress.

Deinstitutionalization

denotes the process of releasing people with mental health conditions from psychiatric hospitals and integrating them into community-based settings, aimed at improving quality of life and reducing reliance on institutional care.

Psychopharmacology

The study of the effects of drugs on the mind and behavior.