Pronto Ltd manufactures photo frames and photo albums but 15 000 units of photo frames could be purchased for $5.00 each. The per-unit costs of production for these frames are: Pronto is considering whether to make or buy the photo frames. The costs that are irrelevant to this decision are:
A) opportunity costs.
B) variable costs.
C) available costs.
D) fixed costs.

Question

Pronto Ltd manufactures photo frames and photo albums but 15 000 units of photo frames could be purchased for $5.00 each. The per-unit costs of production for these frames are:  Pronto is considering whether to make or buy the photo frames. The costs that are irrelevant to this decision are:
A) opportunity costs. 
B) variable costs. 
C) available costs. 
D) fixed costs.

Quizplus · Accepted Answer

The costs that are irrelevant to this decision are fixed costs. Therefore, Pronto should only consider the variable costs and the cost of purchasing the frames when making the decision to make or buy the photo frames.

Pronto Ltd Manufactures Photo Frames and Photo Albums but 15