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

question 72

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 plant used to manufacture the parts
• C)the supervisor's salary of £25,000 that will 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

---

Definitions:

Manufacturing Costs

Costs directly associated with the manufacture of products, encompassing raw materials, labor, and manufacturing overhead expenses.

Direct Materials

Raw materials used in the production process that are directly attributable to the product being manufactured.

Manufacturing Overhead

Refers to indirect factory-related costs that occur when producing a product, which includes costs like utilities, maintenance, and salaries of non-direct labor.

Material Costs

Expenses for raw materials and supplies that are used in the production of goods or in the provision of services.