Question

Which cost is taken into consideration for 'make or buy' decisions?

• A. Prime cost
• B. Total cost
• C. Cost of Production
• D. Relevant cost

Answer 1

Answer: (C)

Cost of Production

Make or buy decision is the production decision made by the company i.e whether to buy the product or to manufacture the product. The cost of buying and manufacturing are both taking into consideration while making the decision. Hence, the cost of production is considered for 'make or buy' decision.