The Crown Company Must Decide Whether to Make or Buy

question 62

Essay

The Crown Company must decide whether to make or buy part 128PC.Although Crown's idle equipment could be used to produce up to 10,000 units of the part, the company presently needs only 7,000 units.The following shows the estimated cost of making part 128PC. Reuten Company will sell part 128PC to the Crown Company for $20 per unit.
Required: Determine whether Crown should make or buy the part, and explain why.

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Definitions:

Utilitarian

A theory or doctrine that actions are right if they are useful or for the benefit of a majority.

CEO Salaries

The compensation provided to the Chief Executive Officer of a company, often including a mixture of base salary, bonuses, shares, and other incentives.

Fairness

The quality of treating people equally without favoritism or discrimination.

General Framework

A broad system or structure that provides guidance or support for activities, processes, or methodologies within a particular domain.