Which of the following is a relevant cost to be included in a make-or-buy decision?
A) fixed salaries that will not be incurred if the part is outsourced
B) pension costs to the current employees
C) increase in the price of all equipment of the firm
D) material-handling costs that cannot be eliminated

Question

Quizplus · Accepted Answer

Fixed salaries that will not be incurred if the part is outsourced are relevant costs as they will be saved if the company decides to buy the part from an outside supplier. Pension costs and equipment price increase are not relevant costs in this decision. Material-handling costs that cannot be eliminated are also not relevant as they will be incurred whether the part is made in-house or outsourced.

Which of the Following Is a Relevant Cost to Be