Relevant data in a make-or-buy decision of a part include which of the following?
A) The portion of fixed costs that would be incurred whether the product is made or purchased
B) Some portion of fixed costs that would be saved if the product is outsourced
C) Annual plant insurance costs
D) Management consultant fees to restructure the organization framework of the company and improve overall strategic planning

Question

Quizplus · Accepted Answer

Relevant costs in a make-or-buy decision include those costs that will change as a result of the decision. Some portion of fixed costs that would be saved if the product is outsourced (e.g., factory overhead that can be avoided) is relevant because it would not be incurred if the decision is to buy.

Relevant Data in a Make-Or-Buy Decision of a Part Include