Gnome Company Is Trying to Decide Whether to Continue to Manufacture

question 160

Multiple Choice

Gnome Company is trying to decide whether to continue to manufacture a particular component or to buy the component from a supplier. Which of the following is relevant to this decision?

• A)the potential uses of the facilities that are currently used to manufacture the component
• B)the insurance on the manufacturing facility which will continue regardless of the decision
• C)allocated corporate fixed costs which would have to be allocated to other products if the component is no longer manufactured
• D)the cost of the equipment that is currently being used to manufacture the component