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

question 77

Multiple Choice

Which of the following costs is NOT relevant to a make-or-buy decision?

• A)£10,000 of direct labour used to manufacture the parts
• B)£30,000 of depreciation on the equipment used to manufacture the parts
• C)the supervisor's salary of £25,000, which would 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

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Definitions:

Perfect Tender Rule

A rule requiring the seller to deliver goods to the buyer that exactly meet the terms of the contract, without any deviation.

Defective

A condition wherein a product does not operate as intended or expected, often leading to a potential hazard or inefficiency.

Reject Shipment

The act of refusing to accept delivery of goods or services due to non-conformance with the agreed terms.

Entire Shipment

A term indicating that a contract or sale involves the delivery of all goods in a single consignment, not in parts.