The Implication of Relevant Cost to Make-or-Buy Decision

Relevant Cost
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Relevant Cost
A make-or-buy decision entails choosing whether to outsource the production of a particular product from external suppliers or manufacturing it in-house. Various considerations should be made to analyze whether a firm should manufacture or purchase a specific commodity (Kenton, 2019). Apart from relevant costs, other factors that need to be considered are the availability of raw materials, the expertise required in manufacturing, resources needed, labor, and the design of the product.
If raw materials are readily available, it is appropriate to manufacture the product instead of outsourcing it. The design of the commodity is also a significant consideration to make. If it is unique and new in the market, it is a bad idea to share it with an external supplier...