Make or buy decisions under limiting factors, Managerial Accounting

MAKE OR BUY DECISIONS UNDER LIMITING FACTORS

One reason for buying products/services from another organisation is the scarcity of resources, so that the company may be unable to make all its components. In such a case the company should combine internal resources with buying externally to increase profitability. In situations where a company must sub-contract work to make up short fall in its in-house capability, then its cost will be minimized where the marginal cost of buying is least for each unit of scarce resource saved by buying externally.

Posted Date: 12/5/2012 7:45:15 AM | Location : United States







Related Discussions:- Make or buy decisions under limiting factors, Assignment Help, Ask Question on Make or buy decisions under limiting factors, Get Answer, Expert's Help, Make or buy decisions under limiting factors Discussions

Write discussion on Make or buy decisions under limiting factors
Your posts are moderated
Related Questions
A purchased product, sold in a retail store, has a normally distributed daily demand, with a mean of 8 units/day and a variance of 4 (units) 2 . Its supply lead time is 6 days and

Funds produced from operations, throughout an accounting period, raise working capital by an equivalent amount. The two major components of funds generated from operations are depr

What are the features of performance budgeting The main features of performance budgeting are:  a)  Classification into functions activities or programmers.  b)  Specifyi

Explain variable cost and fixed cost Variable costs: costs that vary almost in the direct proportion to the volume of production are known as variable costs. The examples of

The Work in Process account for Monty's Company contained the following entries: Work in Process Account Debit of $40,000 for direct raw materials Debit of $60,000 for direct labor

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4 What is the Meaning Cos

The F–test    The significance of the regression results can be tested by using the F- statistics. The F-statistics is a ratio which compares the explained sum of squares and t

What are the Advantages of cost accounting: 1. Cost accounting as an aid to management: cost accounting helps the management in carrying out of its functions, planning, organ


The Value Chain and Cost Analysis The behavior of a firm's costs and its relative cost position stem from the value activities the firm performs in competing in an industry. A me