Considering whether to make or to buy office furniture

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The Really Big Six Corporation will hire 1,000 new accoun- tants this year. Managers are considering whether to make or to buy office furniture for the new hires. Big can purchase office furniture for $2,000 per accountant, or it can make the desks itself. Equipment to assemble furniture can be scrounged from the company’s carpentry shop. That old equipment has already been fully depreciated. Materials cost $500 per desk, and labor (and benefits) costs $30 per hour. Big hired a local shop to build a prototype desk. That desk re- quired 100 hours of labor. If the learning curve is 90 percent, should Big make or buy the desks?

Reference no: EM131427531

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