Xebex Pty Ltd Is Considering Whether to Make or Buy

question 91

Multiple Choice

Xebex Pty Ltd is considering whether to make or buy a component used in the production of Faz Machines. The annual cost of producing the 100 000 components used by the company is as follows.
If Xebex were to discontinue production of the component, direct fixed manufacturing costs would be reduced by 80 per cent.
What are the irrelevant costs in the decision?

• A) $50 000
• B) $70 000
• C) $80 000
• D) $100 000

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