When Are Fixed Costs Relevant in a Make or Buy

question 19

Multiple Choice

When are fixed costs relevant in a make or buy decision?

• A) Fixed costs are never relevant to the decision.
• B) Fixed costs are relevant when they differ among alternatives.
• C) Fixed costs are always relevant to the decision.
• D) Fixed costs are relevant when they exceed variable costs.

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Definitions:

Standard 40-Hour Workweek

A common work schedule that consists of eight hours per day, five days a week.

Full-Time Employee

An individual engaged in a work agreement who provides a set number of hours of service weekly for their employer, typically receiving full employment benefits.

Task Identity

The degree to which a job requires completion of a whole and identifiable piece of work.

Job Redesigned

The restructuring of work tasks and roles to enhance job satisfaction and productivity.