Shasta Company is trying to decide whether to continue to manufacture a particular component or to buy the component from an outside supplier. Which of the following is IRRELEVANT with respect to this decision?

Question

Quizplus · Accepted Answer

The unavoidable fixed manufacturing costs associated with the manufacture of the component are irrelevant because they would be incurred regardless of whether the company continues to manufacture the component or not. The decision should be based on whether the company can save more money by buying the component from an outside supplier (considering the cost of purchasing the component and any additional costs associated with outsourcing, such as transportation costs) or by continuing to manufacture the component in-house (considering the variable costs associated with manufacturing). A, B and C are relevant factors to consider in making the decision.

Shasta Company Is Trying to Decide Whether to Continue to Manufacture