Which of the following costs is NOT relevant to a make-or-buy decision? O A. The supervisor's salary of £25,000 that will be avoided if the part is purchased from an outside supplier OB. £30,000 of depreciation on the plant used to manufacture the parts OC. £15,000 in rent from leasing the production space to another company if the part is purchased from an outside supplier OD. £10,000 of direct labour used to manufacture the parts

Which of the following costs is NOT relevant to a make-or-buy decision? O A. The supervisor's salary of £25,000 that will be avoided if the part is purchased from an outside supplier OB. £30,000 of depreciation on the plant used to manufacture the parts OC. £15,000 in rent from leasing the production space to another company if the part is purchased from an outside supplier OD. £10,000 of direct labour used to manufacture the parts

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter11: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 4CDQ: How would each of the following costs be classified if units produced is the activity base? a....

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Velstrom Ltd is considering outsourcing one of its products rather than producing it in its factory. The business allocates part of the total rental charge of the factory, based on floor area, on the section responsible for making the product. The section bears a charge of £20,000 per year. If the section were closed, the floor space released would be used for warehousing and, as a result, the business would give up the tenancy of an existing warehouse for which it is paying £25,000 a year. A business has approached Velstrom Ltd to offer £22,000 a year to sublet the released factory space. What will be the relevant benefit of releasing the factory space?
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