A restaurant is facing a decision about whether it should bake its own dinner rolls or whether it should continue to purchase the dinner rolls from a local bakery.Which of the following costs would be relevant to its decision?
A)The salary of the restaurant manager
B)The purchase price of the dinner rolls purchased from the local bakery
C)The price the restaurant sells the dinner rolls for
D)The original purchase price of the current machinery

Question

Quizplus · Accepted Answer

The cost of purchasing the dinner rolls from the local bakery is the relevant cost in this decision. The other costs listed (salary of the restaurant manager, sale price of the dinner rolls, original purchase price of machinery) are not directly related to the decision to bake or buy the dinner rolls.

A Restaurant Is Facing a Decision About Whether It Should