Course: Contract and Liquid Chemical Co. Essay

1312 WordsApr 1, 20136 Pages
The Cost Analysis for Decision Making project is intended to be a comprehensive evaluation of the key objectives covered throughout this course. It will challenge you to apply your knowledge of cost information when evaluating the decision to make or buy a product. Please use this outline and grading rubric as a guide to completing your course project. It provides specific details of the required elements of the project, and it will be used by your instructor as a grading guide. Read Integrative Case 4-61, "Make versus Buy," on pages 151 and 152 of the course text. Assume that you are the general manager (Mr. Walsh) faced with this decision. You have identified the following four alternatives available to Liquid Chemical Co. •…show more content…
The Liquid Chemical Company manufactures and sells a range of high-grade products. Many of these products require careful packaging. The company has a special patented lining made that it uses in specially designed packing containers. The lining uses a special material known as GHL. The firm operates a department that maintains and repairs its packing containers to keep them in good condition and that builds new ones to replace units that are damaged beyond repair. Mr. Walsh, the general manager, has for some time suspected that the firm might save money and get equally good service by buying its containers from an outside source. After careful inquiries, he has approached a firm specializing in container production, Packages, Inc., and asked for a quotation. At the same time, he asked Mr. Dyer, his chief accountant, to let him have an up-to-date statement of the costs of operating the container department. Within a few days, the quotation from Packages, Inc., arrived. The firm proposed to supply all the new containers required—at that time, running at the rate of 3,000 per year—for $1,250,000 a year, the contract to run for a guaranteed term of five years and thereafter renewable from year to year. If the number of containers required increased, the contract price would increase proportionally. Packages, Inc., also proposed to perform all maintenance and repair work on existing packaging containers for a sum of $375,000 a year, on the

More about Course: Contract and Liquid Chemical Co. Essay

Open Document