When making a make-or-buy decision for a part,what items are relevant to the decision?
A)variable costs of making the part
B)fixed costs that the company can avoid by not making the part
C)rental income from idle plant when not making the part
D)all of the above

Question

Quizplus · Accepted Answer

All three items listed are relevant to the decision-making process. The variable costs of making the part will help determine if it is cost-effective to produce the part in-house, while the fixed costs that the company can avoid by not making the part will help determine if it is cheaper to outsource. Rental income from idle plant when not making the part will also contribute to the overall costs and should be taken into consideration. Therefore, all three items are important when making a make-or-buy decision for a part.

When Making a Make-Or-Buy Decision for a Part,what Items Are