Relevant costs in a make-or-buy decision of a part include ________.
A) setup overhead for the manufacture of the product using the outsourced part
B) currently used manufacturing capacity that has alternative uses
C) annual plant insurance costs that will remain the same
D) management consultant fees to restructure the organization framework of the company

Question

Quizplus · Accepted Answer

Relevant costs in a make-or-buy decision include costs that will change depending on the decision made. Currently used manufacturing capacity that has alternative uses is relevant because it represents an opportunity cost if the capacity could be used for something else.

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