Which of the Following Costs Is NOT Relevant to a Make-Or-Buy

question 66

Multiple Choice

Which of the following costs is NOT relevant to a make-or-buy decision?

• A) $20,000 of direct labor used to manufacture the parts
• B) $25,000 in rent from leasing the production space to another company if the part is purchased from an outside supplier
• C) the supervisor's salary of $35,000 that will be avoided if the part is purchased from an outside supplier
• D) $40,000 of depreciation on the plant used to manufacture the parts

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Definitions:

Highest Bid

The highest price offered by a bidder at an auction or in a competitive bidding process.

Firm Offer

A rule that no consideration is necessary when a merchant agrees in writing to hold an offer open for the sale of goods.

Consideration

The value (such as money, a promise, or an act) exchanged between parties in a contract.

E-mail

A method of exchanging messages digitally across the internet or other computer networks.