Solution-Should hp outsource component from sanmina

Should hp outsource component from sanmina corporation

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Reference no: EM132515734

Outsourcing (Make-or-Buy) Decision

Assume a division of Hewlett-Packard currently makes 10,000 circuit boards per year used in producing diagnostic electronic instruments at a cost of $36 per board, consisting of variable costs per unit of $24 and fixed costs per unit of $12. Further assume Sanmina Corporation offers to sell Hewlett-Packard the 10,000 circuit boards for $36 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 $30,000 per year. In addition, $5 per unit of the fixed overhead applied to the circuit boards would be totally eliminated.

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Question 1: Should HP outsource this component from Sanmina Corporation? Support your answer with relevant cost calculations.

Reference no: EM132515734

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Should hp outsource component from sanmina corporation

Reference no: EM132515734

Reference no: EM132515734

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