Harris Company Currently Produces a Component That It Uses in Making

question 114

Essay

Harris Company currently produces a component that it uses in making some of its products. Harris has calculated the following costs for making the part:
$$\begin{array} { | l | r | } \hline \text { Unit-level costs } & \\\hline \text { Materials } & \$ 20 \\\hline \text { Labor } & 28 \\\hline \text { Overhead } & 2 \\\hline \text { Allocated facility-level costs } & 10 \\\hline \text { Total cost } & \$ 60 \\\hline\end{array}$$ Harris is considering outsourcing the component. A supplier has offered to sell the component to Harris for $52 each. Harris needs 8,000 units each year.Required: Should Harris outsource the component? Support your answer with appropriate computations.

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Definitions:

Apple-Polishing

Acting in a manner aimed at gaining favor or approval, typically through flattery or sycophancy.

Social IOUs

Informal obligations or debts of favor acquired through social interactions and networking, often leveraged for mutual benefit in personal or professional contexts.

Organizational Politics

The use of power and social networking within an organization to achieve changes that benefit the organization or individuals within it.

Groupthink

A psychological phenomenon that occurs within a group of people, where the desire for harmony or conformity results in an irrational or dysfunctional decision-making outcome.