A Decision to Make a Component Internally Versus Purchasing from a Supplier

question 18

Multiple Choice

A decision to make a component internally versus purchasing from a supplier is a

• A) special-order decision.
• B) keep-or-drop a product-line decision.
• C) make-or-buy decision.
• D) both a and C

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Definitions:

Gross Profit

The difference between revenue and the cost of goods sold before deducting operating expenses, indicating the efficiency of core operations.

Merchandising Profit

The profit a company makes from buying goods at wholesale and selling them at retail.

Company

An entity engaged in commercial, industrial, or professional activities, either for profit or as a nonprofit organization.

Single-Step Income Statement

An income statement that shows only one step in determining net income.