In an outsourcing decision, fixed costs are:
A) Never relevant
B) Relevant if they are greater than associated opportunity costs
C) Relevant if the company is operating outside the relevant range
D) Relevant if they can be avoided through outsourcing

Question

Quizplus · Accepted Answer

Fixed costs are relevant in an outsourcing decision if they can be avoided by choosing to outsource. If outsourcing allows a company to not incur certain fixed costs, those costs become relevant to the decision-making process because they can impact the overall cost comparison between outsourcing and producing in-house.

In an Outsourcing Decision, Fixed Costs Are