Make Or Buy Decision Example Accounting Online
Even though the simple unit cost ($1.00) is lower than the total manufacturing cost ($1.35), the company must compare it to the total relevant cost ($1.05) . Since buying at $1.00 is cheaper than the $1.05 cost of making, the accounting review would suggest buying the component. Key Factors to Review
: Only the avoidable portion (e.g., special lease) is relevant. Opportunity Cost make or buy decision example accounting
An outside supplier offers to provide the same wheel for $1.00 per unit . Even though the simple unit cost ($1