ColorPro Uses Part 87A in the Production of Color Printers

question 88

Multiple Choice

ColorPro uses part 87A in the production of color printers.Unit manufacturing costs for part 87A are:
ColorPro uses 100,000 units of 87A per year.Filbert Company has offered to sell ColorPro 100,000 units of 87A per year for $12.Fixed overhead is unavoidable.
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Now suppose that ColorPro discovers that other costs will increase by $7,000 per year if the component is purchased rather than made internally.Should ColorPro make or buy the part?

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Definitions:

Initiation Phase

The first stage of a project or process, where objectives are defined, feasibility is assessed, and stakeholders are identified.

Risk Management

The method of detecting, evaluating, and managing risks to a company's finances and profits.

Risk Transfer

A strategy in risk management involving shifting the potential risk from one party to another, often through insurance or outsourcing.

Risk Mitigation

Strategies and actions taken to reduce or eliminate the impacts of uncertainty or threats on a project.