Make or Buy Decisions

Section B - Case 2: BioNutri BioNutri manufactures two specialized nutritional supplements: Alpha and Beta. Both products require processing on a specialized mixing machine. The machine is available for a maximum of 1,200 hours per month. Product details: Alpha: Selling price $50, Variable cost $30, Machine hours per unit: 2 hours. Maximum demand: 400 units. Beta: Selling price $70, Variable cost $40, Machine hours per unit: 4 hours. Maximum demand: 300 units. An external supplier has offered to manufacture Product Alpha for BioNutri at a price of $38 per unit. Assuming machine hours remain limited to 1,200, should BioNutri make or buy Product Alpha?

Section B - Case 2: BioNutri BioNutri manufactures two specialized nutritional supplements: Alpha and Beta. Both products require processing on a specialized mixing machine. The machine is available for a maximum of 1,200 hours per month. Product details: Alpha: Selling price $50, Variable cost $30, Machine hours per unit: 2 hours. Maximum demand: 400 units. Beta: Selling price $70, Variable cost $40, Machine hours per unit: 4 hours. Maximum demand: 300 units. Before finalizing the decision to outsource the production of Product Alpha to the external supplier, which TWO of the following non-financial factors should BioNutri consider?