Which of the Following Costs Is Relevant to a Make-Or-Buy

question 30

Multiple Choice

Which of the following costs is relevant to a make-or-buy decision?

• A)original cost of the production equipment
• B)annual depreciation of the equipment
• C)the amount that would be received if the production equipment were sold
• D)the cost of direct materials purchased last month and used to manufacture the component

Understand the concept of founder effects and its relationship with genetic conditions like achromatopsia.

Acquire knowledge on various biological concepts and terminology, such as alleles, blood proteins, biological classification, and genetic principles.

Understand the impact of changes in fixed and variable costs on a firm’s operating leverage.

Recognize the concept of forecasting risk and its implications for NPV estimates.

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Definitions:

Variable Cost

Expenses that change in proportion to the activity of a business such as raw materials and labor costs.

Net Present Value

A calculation that compares the present value of all cash inflows and outflows of a project or investment using a specific discount rate.

One-Shot Approach

A method or strategy executed with a single attempt, without the prospect of repetition.

Monthly Interest Rate

The interest rate applied to a loan or debt for a one-month period, often used to calculate the monthly interest payments.