Which of the following costs are not considered in a differential analysis for a make-or-buy decision?
A) Indirect materials and indirect labor if the item is manufactured internally.
B) Direct materials and direct labor if the item is purchased.
C) Variable overhead if the item is manufactured internally.
D) Fixed overhead that will continue if the item is purchased.

Question

Quizplus · Accepted Answer

Fixed overhead that will continue regardless of the decision is not relevant to the differential analysis, as it does not change between the make-or-buy options.

Which of the Following Costs Are Not Considered in a Differential