Often asked: Which Of The Following Will Not Affect A Make-or-buy Decision?

Which of the following does not influence the make or buy decision?

Which of the following will not affect a make-or-buy decision? Differential fixed costs.

Which of the following costs is relevant to a make or buy decision?

Examples of relevant costs in the context of a make or buy decision include direct labor, direct materials, variable overhead. Other costs that should be considered in this category are any incremental costs necessary for a part manufacturing.

How opportunity cost might affect the make or buy decision?

In business, opportunity costs play a major role in decision-making. If you decide to purchase a new piece of equipment, your opportunity cost is the money spent elsewhere. Companies must take both explicit and implicit costs into account when making rational business decisions.

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When deciding to retain or replace equipment the book value of the old equipment is considered to be a?

In a decision concerning replacing old equipment with new equipment, the book value of the old equipment can be considered a sunk cost. 21. In a decision to retain or replace old equipment, the salvage value of the old equipment is relevant in incremental analysis.

What costs are always relevant?

Relevant costs include differential, avoidable, and opportunity costs. Irrelevant costs include sunk and fixed overhead costs.

Which is the first step in the management decision making process?

The first step in making the right decision is recognizing the problem or opportunity and deciding to address it. Determine why this decision will make a difference to your customers or fellow employees.

What is make buy decision explain with examples?

A Make or Buy Decision is a decision made to either manufacture a product/ service in house or buy it from outside suppliers (outsourcing) based on cost-benefit analysis.

Which of the following costs are always irrelevant in decision making?

Sunk costs are those costs that happened and there is not one thing we can do about it. These costs are never relevant in our decision making process because they already happened! These costs are never a differential cost, meaning, they are always irrelevant.

Which of the following is an example of sunk cost?

A sunk cost refers to a cost that has already occurred and has no potential for recovery in the future. For example, your rent, marketing campaign expenses or money spent on new equipment can be considered sunk costs. A sunk cost can also be referred to as a past cost.

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What is the importance of opportunity cost in decision-making?

The concept of Opportunity Cost helps us to choose the best possible option among all the available options. It helps us to use every possible resource tactfully, efficiently and hence, maximize economic profits.

What is opportunity cost in decision-making?

“Opportunity cost is the cost of a foregone alternative. If you chose one alternative over another, then the cost of choosing that alternative is an opportunity cost. Opportunity cost is the benefits you lose by choosing one alternative over another one.”

Why is opportunity cost important in business decision-making because it stands for?

Opportunity costs represent the potential benefits an individual, investor, or business misses out on when choosing one alternative over another. The idea of opportunity costs is a major concept in economics. Because by definition they are unseen, opportunity costs can be easily overlooked if one is not careful.

What is sell or process further?

The sell or process further decision is the choice of selling a product now or processing it further to earn additional revenue. This choice is based on an incremental analysis of whether the additional revenues to be gained will exceed the additional costs to be incurred as part of the additional processing work.

How is opportunity cost in a make or buy situation handled Group of answer choices?

How is opportunity cost in a make-or-buy situation, handled? It is added to the total “make” column. It is subtracted from the total “make” column. It is subtracted from the total “buy” column.

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Which of the following is the decision rule of a sell or process further decision?

sunk costs. The decision rule in a sell-or-process-further decision is: process further as long as the incremental revenue from processing exceeds: fixed processing costs.

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