Relevant costs in a make-or-buy decision of a part include:
A)setup overhead for the manufacture of the product using the outsourced part
B)currently used manufacturing capacity that has alternative uses
C)annual plant insurance costs that will remain the same
D)corporate office costs that will be allocated differently

Question

Quizplus · Accepted Answer

In a make-or-buy decision, relevant costs include those that will change depending on the decision made. Currently used manufacturing capacity that has alternative uses is relevant because it represents an opportunity cost if the capacity could be used for something else.

Relevant Costs in a Make-Or-Buy Decision of a Part Include