A COMPANY IS CURRENTLY MAKING A NECESSARY COMPONENT IN HOUSE (THE COMPANY IS PRO

Question

A COMPANY IS CURRENTLY MAKING A NECESSARY COMPONENT IN HOUSE (THE COMPANY IS PRODUCING THE COMPONENT FOR ITS OWN USE).
THE COMPANY HAS RECEIVED AN OFFER TO BUY THE COMPONENT FROM AN OUTSIDE SUPPLIER.
A MACHINE IS BEING RENTED TO MAKE THE COMPONENT.
IF THE COMPANY WERE TO BUY THE COMPONENT, THE MACHINE WOULD NO LONGER BE RENTED. THE RENT ON THE MACHINE IN RELATION TO THE DECISION TO MAKE OR BUY THE COMPONENT IS:
A. AVOIDABLE AND THEREFORE RELEVENT
B. SUNK AND THEREFORE NOT RELEVENT
C. AVOIDABLE AND THEREFORE NOT RELEVENT
D. UNAVOIDABLE AND THEREFORE RELEVENT

Explanation / Answer

D

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