Answer (C) is correct . The relevant costs in a make-versus-buy decision are those that differ between the two decision choices. These costs include any variable costs plus any avoidable fixed costs. Avoidable fixed costs will not be incurred if the “buy” decision is selected.
Answer (A) is incorrect because Factory management costs are unlikely to differ regardless of which decision is selected.
Answer (B) is incorrect because General office costs are unlikely to differ regardless of which decision is selected.
Answer (D) is incorrect because Depreciation costs are unlikely to differ regardless of which decision is selected.
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