Which statement is true concerning the decision rule on whether to make or buy?
A) The company should buy if the cost of buying is less than the cost of producing.
B) The company should buy if the incremental revenue exceeds the incremental costs.
C) The company should buy as long as total revenue exceeds present revenues.
D) The company should buy assuming no additional fixed costs are incurred.

Question

Quizplus · Accepted Answer

The decision rule on whether to make or buy is based on comparing the cost of buying with the cost of producing. If the cost of buying is less than the cost of producing, then the company should buy. Therefore, option A is the correct choice. Options B, C, and D are incorrect because they do not accurately reflect the decision rule on whether to make or buy.

Which Statement Is True Concerning the Decision Rule on Whether