Which of the following costs is NOT relevant to a make-or-buy decision?
A) $10,000 of direct labor used to manufacture the parts
B) $30,000 of depreciation on the plant used to manufacture the parts
C) the supervisor's salary of $25,000 that will be avoided if the part is purchased from an outside supplier
D) $15,000 in rent from leasing the production space to another company if the part is purchased from an outside supplier

Question

Quizplus · Accepted Answer

Depreciation on the plant used to manufacture the parts is a sunk cost and therefore not relevant to the decision. The other costs listed are relevant and should be considered in a make-or-buy decision.

Which of the Following Costs Is NOT Relevant to a Make-Or-Buy