Gerond Ltd Has Developed a New Product ‘Q' and Is

question 23

Essay

Gerond Ltd has developed a new product ‘Q' and is deciding whether to ‘outsource' it (get it made outside) or to make it themselves. It is a key product in their new range.
It has researched the figures and using these and the company's overhead absorption rates has calculated the absorption production cost as follows. It has also obtained a quote for making it from a firm in the same industry sector
Costs of Manufacture Buy in Cost
Direct Mats 4
Direct Labour 6
Variable Overheads 3
Fixed Overheads 7
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Absorption Cost £20 Price to Buy £15
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Should it buy or make it on the grounds of:
1 Cost only?
2 Taking other factors into account

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Definitions:

Ethical Principle

Fundamental guidelines that help determine the rightness or wrongness of actions within a professional or societal context.

Fidelity

The degree of accuracy and exactness with which something is copied or reproduced, or loyalty and faithfulness to commitments and obligations.

Social Networking

The use of internet-based platforms to connect, share information, or interact with people who share similar interests, backgrounds, or real-life connections.

Confidentiality

The ethical duty to keep personal and sensitive information private unless consent to release it is given.