The Boise Printing Press Company has been purchasing all of its small machined shafts and gears from a machine shop for about $130,000 annually.If Boise buys two lathes,a drill press,and a milling machine,it could produce these parts itself.The equipment,materials,and two machinists would cost the company $450,000 over five years,a savings of $200,000.Should Boise pursue this option?

Question

Quizplus · Accepted Answer

While it may be cheaper to make the parts, the decision to pursue this option should not solely be based on cost savings. The company should also consider if this is the best use of their resources and if there are other projects or areas where the money could be better invested for increased profitability.

The Boise Printing Press Company Has Been Purchasing All of Its