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Make or buy. Horseman Plastics manufactures plastic housings for airconditioners. One of the parts required to manufacture an airconditioner plastic housing is currently produced by
Make or buy. Horseman Plastics manufactures plastic housings for airconditioners. One of the parts required to manufacture an airconditioner plastic housing is currently produced by Horseman at a rate of 90,000 units annually. The management is considering purchasing the part from an external vendor, Heavy Plaxtics, Inc. The following data are made available for making a decision: C Required: 1. Assuming all of Horseman's internal production costs are all avoidable if it purchases rather than make the parts, which alternative is better and by how much is its net advantage? 2. Assuming that Horseman's fixed overhead is unavoidable regardless of the alternative chosen, how much is the opportunity cost of the decision to buy the part from an outside supplier? no opportanlty cost
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