Qualitative Factors That Should Be Considered When Evaluating a Make-Or-Buy

question 160

Multiple Choice

Qualitative factors that should be considered when evaluating a make-or-buy decision are

• A) the quality of the outside supplier's product.
• B) whether the outside supplier can provide the needed quantities.
• C) whether the outside supplier can provide the product when it is needed.
• D) All of these.

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Definitions:

Activity-Based Costing

A costing method that assigns costs to products or services based on the activities and resources that go into producing them, aiming for more accurate cost allocation.

Product Margin

The amount by which a product's selling price exceeds its cost of production, contributing towards covering fixed costs and profit.

Direct Materials Cost

The cost of raw materials that are directly involved in the production of a product, easily traced back to the product itself.

Activity-Based Costing

An accounting approach that assigns costs to products or services based on the activities and resources used in production or provision.