Question

Perfect Plumbing Corporation currently manufactures a valve for use in water pumps that it produces for sale. The company is considering purchasing the valves from an outside supplier rather than manufacturing them. Which of the following costs is not relevant to the decision?
A. The cost of direct material required to make the valve.
B. The price charged by the outside supplier for an identical valve.
C. The cost of the machinery owned by Perfect Plumbing used exclusively to manufacture this valve.
D. The salvage value of the machinery owned by Perfect Plumbing used exclusively to manufacture this valve.

Answer 1

Answer:

Perfect Plumbing Corporation currently manufactures a valve for use in water pumps that it produces for sale. The company is considering purchasing the valves from an outside supplier rather than manufacturing them. Which of the following costs is not relevant to the decision?

The cost of direct material required to make the valve.

Explanation:

Since perfect plumbing corporation intended to buy rather than to manufacture then the cost of direct material required to make the valve is none of there concern. The would only purchase and sell at price that suits them