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Make or Buy? QCP Co. manufactures 50,000 lightbulbs for their lamps. They have provided the following cost data related to the making of these lightbulbs:

Make or Buy?

QCP Co. manufactures 50,000 lightbulbs for their lamps. They have provided the following cost data related to the making of these lightbulbs: An outside supplier has offered to sell 50,000 such lightbulbs for $.70 each on a yearly basis. If QCP accepted the offer, FMO applied to the lightbulbs would go down to $1,000 and facilities currently used to manufacture the lightbulbs could be rented for $5,000 a year. What should be done and how much money would the company give up if it chose the wrong alternative?

DMu

.07

DLu

.08

VMOu

.16

FMO

$6,000

VSAu

.17

FSA

$12,500

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