BUSINESS LAW

Business Law and Accounting Questions

Business Law and Accounting Questions

Management is often faced with the alternative of continuing to make a product or component internally, or going to an external source and purchasing the product or component. In gathering relevant information for these two alternatives, briefly identify the qualitative (non-financial) factors that should be considered. What role does opportunity cost play in a make-or-buy decision? Provide examples to illustrate your point.

Answer

The company has the choice either to buy the product from the market or make it internally. Both scenarios have its pros and cons as well as the opportunity ...