A Company Is Planning to Introduce a New Portable Computer $\text { Per case }$

Essay

A company is planning to introduce a new portable computer to its existing product line. Management must decide whether to make the computer case or buy it from an outside supplier. The lowest outside price is $90. If the case is produced internally, the company will have to purchase new equipment that will yield annual depreciation of $130,000. The company will also need to rent a new production facility at $200,000 a year. At 20,000 cases per year, a preliminary analysis of production costs shows the following:
$\text { Per case }$
$\begin{array}{ll} \text { Dired materials. } & \$ 40.00 \\ \text { Dired labor... } & 32.00 \\ \text { Variable overhead. } & 10.00 \\ \text { Equipment depreciation . } & 6.50 \\\text { Building rental } & 10.00 \\ \text { Allocated fixed overhead } & 7.50 \\\end{array}$

Required:
(1) Determine whether the company should make the cases or buy them from the outside supplier.
(2) What other factors, besides cost, should the company consider?