Outsourcing (Make-or-Buy) Decision Assume a division of Hewlett-Packard currently makes 12,000 circuit boards per year...
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Outsourcing (Make-or-Buy) Decision Assume a division of Hewlett-Packard currently makes 12,000 circuit boards per year used in producing diagnostic electronic instruments at a cost of $29 per board, consisting of variable costs per unit of $21 and fixed costs per unit of $8. Further assume Sanmina-SCI offers to sell Hewlett-Packard the 12,000 circuit boards for $29 each. If Hewlett-Packard accepts this offer, the facilities currently used to make the boards could be rented to one of Hewlett-Packard's suppliers for $28,000 per year. In addition, $5 per unit of the fixed overhead applied to the circuit boards would be totally eliminated. Calculate the net benefit (cost) to HP of outsourcing the component from Samina-SCI. Use a negative sign with your answer, if appropriate. $Answer
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