Accounting › Section W · Short-term decision making › Topic W.3

Make or buy

Almost every product contains parts its maker could produce itself or buy from someone else. A supplier's quote often looks cheaper than the in-house cost per unit, but that comparison is only fair once you know which in-house costs would really disappear.

In this topic

  • Outsourcing is a choice between alternatives
  • What it really costs to make
  • What it really costs to buy
  • Worked example: chain guards at Halsway Bicycle Co.
  • Freed capacity has value
  • Worked example: putting the freed space to work
  • Service businesses face the same choice
  • Qualitative factors
  • Common mistakes to avoid
  • Key takeaways

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