Direct Material Costs Are Always Considered Relevant Costs in a Make

question 62

True/False

Direct material costs are always considered relevant costs in a make or buy decision.

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Definitions:

Total Fixed Costs

The sum of all costs that do not change with the level of production or sales activities within a certain range or period.

Unit Variable Cost

The variable cost associated with producing one unit of product, including labor, materials, and other costs that vary with production volume.

Unit Sales Price

The amount of money charged for one unit of a product or service.

Make Or Buy Analysis

A decision-making process used by companies to determine whether products or services should be produced internally or purchased from an external supplier.