Question

In a make or buy decision, management should consider all of the following except a. opportunity costs of making internally. b. costs that are avoidable by buying outside the company. c. costs common to making internally or buying outside the company. d. other qualitative factors.

Solution

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Answered 1 year ago
Answered 1 year ago
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Answer is C. Cost common to making internally or buying outside the company.

The costs that are relevant in a make or buy decision should be incremental and avoidable and common costs are not incremental.

Choices A,B and D are all considered in making decision whether to make or buy.

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