Question: Global Communications Inc manufactures communications satellites used in TV signal

Global Communications, Inc. manufactures communications satellites used in TV signal transmission. The firm currently purchases one component for its satellites from a European firm. A Global Communications engineering team has found a way to use the company’s own component, part number A200, instead of the European component. However, the Global Communications component must be modified at a cost of be modified at a cost of $ 650 per part. The European component costs $ 9,100 per part. Global Communications’ part number A200 costs $ 4,900 before it is modified. Global Communications currently uses 15 of the European components per year.

Required:
Calculate the annual differential cost between Global Communications’ two production alternatives.


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  • CreatedApril 22, 2014
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