Companies should always outsource if the cost of purchasing is less than the total cost of producing the unit under absorption costing.

Question

Quizplus · Accepted Answer

The decision to outsource should not be based solely on cost. Other factors, such as quality control, lead time, and intellectual property concerns, should also be considered. Additionally, the use of absorption costing as a determinant of outsourcing is limited because it does not consider the impact of fixed costs on production.

Companies Should Always Outsource If the Cost of Purchasing Is