BE$5\mathrm{.}5-$ Using Excel to Evaluate a Make$-$Versus$-$Buy Decision

PROBLEM

Grunar Industries produces the component parts needed for its popular

non$-$commercial$-$use drones. One of the key parts has become more costly

to produce than first planned, however, so management is considering

outsourcing that part. If the company decides not to manufacture this part,

a portion of its fixed manufacturing overhead costs would continue. The

costs to produce one such part internally and to purchase on part from the

suppler are given here.

Costs to produce internally

Direct materials

Direct labor

Variable manufacturing overhead

Fixed manufacturing overhead

Cost to purchase from a supplier

Portion of fixed manufacturing cost to continue

Student Work Area

Required: Provide input into cells shaded in yellow in this template. Input the

required mathematical formulas or functions with cell references to the Problem

area or work area as indicated.

Complete the schedule to support the decision of whether to make or buy the par

Should Grunar continue to make the part or buy it from the supplier?