The Costs That Should Be Included in an Outsourcing Decision

question 52

Multiple Choice

The costs that should be included in an outsourcing decision are

• A)sunk costs.
• B)recurring costs.
• C)relevant costs.
• D)fixed costs.

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Definitions:

Equivalent Units

A concept in cost accounting used to express the amount of work done by manufacturers in terms of fully completed units of output.

Conversion Cost

The sum of direct labor and manufacturing overhead costs, representing the expenses necessary to convert raw materials into finished goods.

Materials

Substances or components that are used in the manufacturing or production process to create goods and products.

Molding Department

A specific section within a manufacturing facility dedicated to the process of shaping materials using rigid frames or models called molds.