The Great Plains Printing Press Company has been purchasing all of its small machined shafts and gears from a machine shop for about $130,000 annually.If Great Plains 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 Great Plains pursue this option?

Question

Quizplus · Accepted Answer

While it appears that Great Plains would save money by producing the parts themselves, the decision should not be based solely on cost savings. Great Plains should consider whether producing the parts in-house is the best use of company resources and if the money could be better used for other projects that could generate even more profit. Therefore, option D is the best choice as it acknowledges the cost savings but also considers the larger picture of resource allocation and profitability.

The Great Plains Printing Press Company Has Been Purchasing All