Assume that you are the general manager (Mr. Walsh) faced with this decision. You have identified the following four alternatives available to Liquid Chemical Co.

Alternative A: It is the status quo. (i.e., Liquid Chemical Co. will continue making the containers and performing maintenance.)

Alternative B: Liquid Chemical Co. will continue making the containers, but it will outsource the maintenance to Packages, Inc.

Alternative C: Liquid Chemical Co. will buy containers from Packages, Inc., but it will perform the maintenance.

Alternative D: It is completely outsourced. Packages, Inc. will make the containers and provide the necessary maintenance.

Your project should include the following items:

Part (a): Discuss each of the four alternatives outlined above. Identify the relevant costs (including amounts) for each of the four alternatives, and explain why these costs are relevant to the decision. Identify any costs that are not relevant, and explain why they are not relevant. What are the advantages and disadvantages of each alternative? Who benefits and who loses?

Part (b): Other than the relevant costs identified in Part (a), what additional information would you use when making your decision? Are there financial factors other than those identified in the case study that you would incorporate into your decision? What nonfinancial information would affect your decision?

Part (c): As the general manager, which alternative would you choose, and why? Support your conclusion with facts and figures, as necessary.

Materials $700,000 Labor Supervisor 50,000 Workers 450,000 Department overheads Managers salary $80,000 Rent on container department 45,000 Depreciation on machinery 150,000 Maintenance of machinery 36,000 Other expenses 157,500 Total 468,500 $1,668,500 Proportion of general administrative overheads 225,000 Total cost of department for the year 1,893,500