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Unformatted text preview: be incurred even if the pumps are purchased. Xyon has an alternative use for the facility. Although it does not change the outcome of the analysis, the opportunity cost should be counted as a cost of making or a benefit of buying the pumps. b. Benefits of outsourcing the pumps to Kobec include the reliability and expertise of the supplier. Xyon admits that it has little experience with the products it currently buys from Kobec, and its inexperience might cost the company more than the $170,000 extra per month it spends. In other words, Xyon’s costs of making the pumps might be understated. Problems of outsourcing include possible adverse impacts if Kobec does not meet its obligations of quality and timeliness....
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- Spring '08
- Cost Accounting, Economic cost, Xyon, Components Assembly labor, Assembly labor Facility, labor Facility costs