General Business ACC212 Chapter Notes - Chapter 7: Sunk Costs, Skimmed Milk, Cottage Cheese
29 Nov 2017
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In a make-or-buy decision, the relevant costs are: Let"s re(cid:448)ie(cid:449) the manufacturing costs that will be saved. the purchase price of the units. opportunity costs. all of the above. In a make-or-buy decision, the relevant costs are: the manufacturing costs that will be saved. the purchase price of the units. opportunity costs. all of the above. Manufacturers may have to decide, at a given point in production, whether to sell now or to process further and sell at a higher price later. Decision rule: process further as long as the incremental revenue from such processing exceeds the incremental processing costs. Unused capacity is available to enable the company to finish the tables. Incremental revenue exceeds incremental processing costs . 40; income increases . 60 per unit. Especially appropriate when multiple products are produced simultaneously. Many end-products are produced from a single raw material and a common production process.
