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 equipment used to manufacture the parts
C)the supervisor's salary of £25,000, which would 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 equipment is a sunk cost and is not relevant to a make-or-buy decision. The other options all represent costs that would be affected by the decision to make or buy a part.

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