Which of the following costs is NOT relevant to a make-or-buy decision?
A)£10,000 of direct labour used to manufacture the parts
B)£30,000 of depreciation on the plant used to manufacture the parts
C)the supervisor's salary of £25,000 that will be avoided if the part is purchased from an outside supplier
D)£15,000 in rent from leasing the production space to another company if the part is purchased from an outside supplier

Question

Quizplus · Accepted Answer

Depreciation on the plant used to manufacture the parts is a sunk cost and therefore not relevant to a make-or-buy decision. The other options are all relevant costs that should be considered in the decision making process.

Which of the Following Costs Is NOT Relevant to a Make-Or-Buy