If you have sunk costs of $75,000 in the "Buy column" would you accept or reject this alternative.If you look at the chart above which numbers/costs are the most prominent for the success of a company and why?

There is no more information

Opportunity Cost The foregoing make-or-buy analysis is complete only if it is assumed that the productive capacity used to make the ignition switches cannot be converted to another purpose. If there is an opportunity to use this productive capacity in some other manner, then this opportunity cost must be considered. As indicated earlier, opportunity cost is the lost potential benefit that could have been obtained by following an alternative course of action (see Ethics Note). ETHICS NOTE In the make-or-buy decision, it is important for management to take into account the social impact of its choice. For instance, buying may be the most economically feasible solution, but such action could result in the closure of a manufacturing plant and laying off many good workers. To illustrate, assume that through buying the switches, Baron Company can use the released productive capacity to generate additional income of $38,000 from producing a different product. This lost income is an additional cost of continuing to make the switches in the make-or-buy decision. This opportunity cost is therefore added to the "Make" column for comparison. As shown in Illustration 7.7, it is now advantageous to buy the ignition switches because the company's income would increase by $13,000. Incremental Analysis - Make or buy with opportunity cost Home Page Layout Formatura este PI 1 2 Total annual cost 3 Opportunity cost 4 Total cost Make $225,000 38.000 $263,000 Buy $250,000 0 $250,000 D Net Income Increase (Decrease) $125,000) 38,000 $ 13,000