When deciding whether to make or buy a component part, the most relevant consideration is often:
A) The average total cost of making the part.
B) The unavoidable fixed manufacturing costs.
C) The variable manufacturing costs per unit.
D) The sunk cost of equipment used to manufacture the part.

Question

Quizplus · Accepted Answer

The variable manufacturing costs per unit are the most relevant consideration because they directly affect the cost of producing each additional unit and can be compared to the purchase price from an external supplier.

When Deciding Whether to Make or Buy a Component Part