Wilson is currently producing a component for one of its products.Wilson has received an offer to buy the component from an outside supplier.A machine is currently being rented to manufacture the component.If the company buys the component, the rental will be cancelled.What is the rent on the machine, in relation to the decision to make or buy the component?
A)Sunk and therefore not relevant
B)Avoidable and therefore not relevant
C)Avoidable and therefore relevant
D)Unavoidable and therefore relevant

Question

Quizplus · Accepted Answer

The rent on the machine is avoidable since it can be cancelled if the company decides to buy the component from the outside supplier. Therefore, it is relevant to the decision of whether to make or buy the component.

Wilson Is Currently Producing a Component for One of Its