Harrier Company is considering an opportunity to outsource the production of a compressor used in its residential air conditioning units. If it does so, a production supervisor will be deployed elsewhere in the company. The supervisor's salary is an example of a relevant cost.

Question

Quizplus · Accepted Answer

The supervisor's salary is not a relevant cost in the decision to outsource the compressor production because it will be incurred regardless of the decision; the supervisor will still be paid the same salary by being deployed elsewhere in the company.

Harrier Company Is Considering an Opportunity to Outsource the Production