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What is the effect of outsourcing

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Question - Emery Products is deciding to outsource the production of a certain component that is included in all of its products. It currently costs emery products $1.20 to make each component in house. If emery products outsources, it can buy the component readymade for $0.90 each, and can shut down the production facilities it is currently using to manufacture the component, and save $20,000 a year in fixed costs. Annual requirement for the component is $12,000 units. What is the effect of outsourcing? (Make or Buy)

Reference no: EM133112529

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