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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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Can direct materials ever be irrelevant in a make-or-buy decision? Explain.

To determine

Describe whether the direct materials can be considered as irrelevant in a make-or-buy decision.

Explanation

Make-or-Buy Decisions:

The common problem for the managers is to make a decision about whether to purchase a product from the supplier or to produce the same. The decisions which involve the choice between external production and internal production are known as make-or-buy decisions.

In the make-or-buy decision, the company can have two alternatives that are either to produce the product or to purchase it from the outside supplier...

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