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The Make-or-Buy Decision
The Outsourcing Offer
You are a Management Accountant at 'Precision Parts Inc.', which manufactures a component (Part X) for its final product. The annual production is 10,000 units. A supplier has offered to sell Part X for ₹18 per unit. The current cost to manufacture one unit of Part X in-house is: - Direct Materials: ₹8 - Direct Labor: ₹5 - Variable Overhead: ₹3 - Fixed Overhead (allocated): ₹4 Total Cost: ₹20 per unit.