To perform the financial calculations of the make-or-buy decision, which costs are needed?
A) Fixed and variable
B) Fixed and average
C) Variable and average
D) Variable only
E) Average only

Question

Quizplus · Accepted Answer

In order to perform financial calculations for a make-or-buy decision, both fixed and variable costs must be considered. Fixed costs are expenses that do not vary with production level, such as rent or equipment depreciation. Variable costs are expenses that increase or decrease with production, such as raw materials or labor costs. By analyzing both types of costs, a company can determine which option, making or buying, is more financially advantageous. Therefore, the answer is A.

To Perform the Financial Calculations of the Make-Or-Buy Decision, Which