Question 6. Question : Relevant costs for a make-or-buy
decision for a component part
include all of the following EXCEPT:
Student Answer:
Fixed salaries that will not be incurred if the part is
outsourced.
Payroll tax (unemployment insurance cost), because of
outsourcing.
Material-handling costs that can be eliminated if the part is
outsourced.
Special machinery for the part that has no resale value.
Current direct material costs for the part.
UNIT 4 QUIZ
Question 7. Question : Which one of the following is an
advantage of the book
(accounting) rate of return method for analyzing capital
investment proposals?
Student Answer:
It is not affected by different accounting methods.
It is precise and objective.
Data for calculating the return are typically readily available.