Which of the following costs are not considered in a differential analysis for a make-or-buy decision?
A)Indirect materials and indirect labor if the item is purchased.
B)Direct materials and direct labor if the item is manufactured internally.
C)Variable overhead if the item is purchased.
D)Fixed overhead that will continue if the item is purchaseD.

Question

Quizplus · Accepted Answer

Fixed overhead that will continue if the item is purchased is not relevant in a make-or-buy decision because it will be incurred regardless of the decision made. The other costs listed are relevant and should be considered in a differential analysis.

Which of the Following Costs Are Not Considered in a Differential