Relevant costs in a make-vs.-buy decision of a part include:
A) Corporate headquarter costs that will be allocated differently depending on the decision option chosen.
B) Setup overhead costs for the manufacture of the product using the outsourced part.
C) The cost of currently used manufacturing capacity that has alternative uses if the part is outsourced.
D) Factory-related insurance cost.
E) Corporate (i.e., headquarter) salaries.

Question

Quizplus · Accepted Answer

The cost of currently used manufacturing capacity that has alternative uses if the part is outsourced is a relevant cost in making this decision. The other options listed are not relevant to this decision.

Relevant Costs in a Make-Vs