Numerical on Make or Buy decision

Q.  A box manufacturer discovers that while it costs Rs 6.25 per unit to make a component T the same is available in the market at Rs 5.75 each. There is reliability of regular supply. The breakdown of costs is materials is Rs 2.75 per unit, Labor is Rs 1.75 per unit, Other variable expenses is Rs 0.50 and depreciation and other fixed costs is Rs 1.25. Will you make or buy?
- Published on 08 Sep 15

a. Buy the product
b. Make the product
c. Either a or b
d. None of the above

ANSWER: Make the product

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