Asked by
Brayden Sipple
on Nov 12, 2024Verified
In a make or buy decision, which of the costs below are relevant
A) Only conversion costs.
B) Fixed costs that can be avoided in the future if the decision is to buy.
C) Only direct material costs.
D) Fixed costs that will not change regardless of the decision.
Conversion Costs
Costs that are incurred to convert raw materials into finished goods, which typically include labor and manufacturing overhead expenses.
Relevant Costs
Costs that should be considered when making business decisions because they will be affected by the decision.
Direct Material Costs
Direct material costs are the expenses for raw materials that can be directly traced to the production of specific goods or services.
- Understand the concept of relevant costs in decision-making processes.
Verified Answer
NT
Learning Objectives
- Understand the concept of relevant costs in decision-making processes.