Which of the following items should not be considered when evaluating a make-or-buy decision?
A) The reliability of the supplier's delivery schedule.
B) Quality of the supplier's product.
C) Net book value (NBV) of the production equipment currently used to make the item in question.
D) Contribution margin generated by an alternative use of the production equipment.
E) Financial stability of the supplier.

Question

Quizplus · Accepted Answer

The net book value (NBV) of the production equipment currently used to make the item in question should not be considered as it is a sunk cost and not relevant to the make-or-buy decision. The decision should be based on future costs and benefits.

Which of the Following Items Should Not Be Considered When