Southwestern Company Needs 1,000 Motors in Its Manufacture of Automobiles

Essay

Southwestern Company needs 1,000 motors in its manufacture of automobiles. It can buy the motors from Jinx Motors for $1,250 each. Southwestern's plant can manufacture the motors for the following costs per unit:

If Southwestern buys the motors from Jinx, 30% of the fixed manufacturing overhead applied will be avoided.
Required:
a. Should the company make or buy the motors?
b. What additional qualitative factors should Southwestern consider in deciding whether or not to make or buy the motors?