In a Make-Or-Buy Decision, If Facilities Are and Will Remain

question 37

True/False

In a make-or-buy decision, if facilities are and will remain idle when the decision is made to not make a part internally, then the opportunity cost is zero.

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Definitions:

Profit

The financial gain achieved when the revenues earned from business activities exceed the expenses, costs, and taxes needed to sustain the activity.

Personally Liable

The state of being legally responsible for one's actions on an individual basis, which can result in personal financial liability.

Partnership

A form of business conduct legally established among at least two partners with shared responsibilities and profit distribution.

Debts

Money owed by one party to another under an agreement that the amount will be paid back, often with interest, by a certain date.