Quinta Inc. manufactures machine parts for aircraft engines. The CEO is considering an offer from a subcontractor who would provide 2,800 units of product QR128 for a price of $190,000. If Quinta does not purchase these parts from the subcontractor it must produce them in-house with the following costs: In addition to the above costs, if Quinta produces part QR128, there would also be a retooling and design cost of $13,000. Should Quinta Inc. accept the offer from the subcontractor?

Question

Quinta Inc. manufactures machine parts for aircraft engines. The CEO is considering an offer from a subcontractor who would provide 2,800 units of product QR128 for a price of $190,000. If Quinta does not purchase these parts from the subcontractor it must produce them in-house with the following costs:  In addition to the above costs, if Quinta produces part QR128, there would also be a retooling and design cost of $13,000. Should Quinta Inc. accept the offer from the subcontractor?

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The Answer of Quinta Inc. manufactures machine parts for aircraft engines. The CEO is considering an offer from a subcontractor who would provide 2,800 units of product QR128 for a price of $190,000. If Quinta does not purchase these parts from the subcontractor it must produce them in-house with the following costs:  In addition to the above costs, if Quinta produces part QR128, there would also be a retooling and design cost of $13,000. Should Quinta Inc. accept the offer from the subcontractor?