When Making a Make-Or-Buy Decision for a Part Used in a Product,which

question 26

Multiple Choice

When making a make-or-buy decision for a part used in a product,which of the following item is relevant to the decision?

• A) variable costs of making the part
• B) contribution margin on new products manufactured in idle area not used for making part
• C) rental income from idle plant when not making the part
• D) all of the above

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Definitions:

Operating Cash Flows

The amount of cash generated by a company's normal business operations over a specific period.

Credit Analysis

The evaluation of an individual's or organization's ability to repay debt.

Probability of Default

An estimate of the likelihood that a borrower will be unable to meet debt obligations as specified in the terms of the loan, typically expressed as a percentage.

Indebtedness

The state of owing money or being obliged to repay a monetary loan.