which Of The Following Is Not A Qualitative Factor To Be Considered In A Make-or-buy Decision?

Which of the following factors are not qualitative factors in a make-or-buy decision?

Question: Which of the following is not a qualitative factor to be considered in a make-or-buy decision? Possible lost jobs from buying outside supplier’s ability to satisfy quality standards Direct materials and direct labor costs from making Outside supplier’s ability to meet production schedule.

What qualitative non financial factors might influence the decision to make-or-buy?

Choosing between these two methods is called the make-or-buy decision, or the outsourcing decision. Factors that influence the make-or-buy decision include both quantitative factors such as cost and time and qualitative factors such as the suppliers’ trustworthiness and the quality of their products.

What other factors should consider in deciding whether to accept the one time special order?

When deciding whether to accept a special order, management must consider several factors:

  • The capacity required to fulfill the special order.
  • Whether the price offered by the buyer will cover the cost of producing the products.
  • The role of fixed costs in the analysis.
  • Qualitative factors.
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Which of the following is an irrelevant cost?

Irrelevant costs are those that will not change in the future when you make one decision versus another. Examples of irrelevant costs are sunk costs, committed costs, or overheads as these cannot be avoided.

What are qualitative factors in decision making?

Qualitative factors are decision outcomes that cannot be measured. Examples of qualitative factors are: Morale. The impact on employee morale of adding a break room to the production area.

What are quantitative and qualitative factors in decision making?

What are the qualitative and quantitative factors in decision making? Quantitative decisions are mostly based on statistical analysis of collected data whereas qualitative decisions are based on many algorithms like type and quality of data, factors that influence collected data, risk assessments etc.

Do qualitative factors matter in accounting?

Although relatively more difficult to analyze, the qualitative factors are an important part of a company. Since they are not measured by a number, they tend to be subjective and represent either a negative or positive force affecting the company.

What are the factors that influence the make or buy decision?

Factors Influencing Make or Buy Decision:

  • Volume of Production:
  • Cost Analysis:
  • Utilization of Production Capacity:
  • Integration of Production System:
  • Availability of Manpower:
  • Secrecy or Protection of Patent Right:
  • Fixed Cost:
  • Availability of competent suppliers or vendors.

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.

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Is fixed costs relevant in decision making?

Generally speaking, variable costs are more relevant to production decisions than fixed costs. Therefore, in most straightforward instances, fixed costs are not relevant for production decision, and incremental costs, or variable costs, are relevant for these decisions.

What are special order decisions?

Special-order decisions involve situations in which management must decide whether to accept unusual customer orders. These orders typically require special processing or involve a request for a low price.

When should a special order be accepted?

A special order generally should be accepted if: A) its revenue exceeds allocated fixed costs, regardless of the variable costs associated with the order.

What makes a cost relevant?

A relevant cost is a cost that only relates to a specific management decision, and which will change in the future as a result of that decision. The relevant cost concept is extremely useful for eliminating extraneous information from a particular decision-making process.

What is imputed cost with example?

Imputed cost is the cost incurred during the period when an asset is employed for a particular use, rather than redirecting the asset to a different use. This amount is the incremental difference between the two options. For example, a teacher decides to go back to school to earn a master’s degree.

What costs are always relevant?

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

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