Decision Making and Relevant Costs at Amazon

Values:

• Internal Production Cost: $10 per unit
• Outsourcing Cost: $8 per unit
• Quality Control Cost: $1 per unit

Requirements: Present the decision-making process using a paragraph format.

Amazon is considering whether to continue manufacturing a product internally or outsource it to a third-party supplier. The internal production cost is $10 per unit, while outsourcing costs $8 per unit. In addition to production costs, internal production incurs quality control costs of $1 per unit. Based on these costs, Amazon will assess the most cost-effective option to maximize profitability and ensure quality standards.