Rafanzai - Relevant Items Rafanzai Table Company manufactures tables. The manufa

Question

Rafanzai - Relevant Items Rafanzai Table Company manufactures tables. The manufacturing process uses a variety of metal pieces such as brackets, braces, and casters. Stacy Robe, the resource officer of Rafanzai, has been asked to determine if it is advisable to purchase these pieces rather than make them internally (the current practice). Identify which of the following items are relevant to her decision by circling the number preceding each item. 1· The original cost of equipment currently used to make metal pieces. 2. The market value of equipment currently used to make metal pieces. 3· The cost of buying metal pieces from suppliers. 4. Rent revenue for the space freed up if metal pieces are not made internally. 5. The salary of the president of Rafanzai Table. 6. The quality of the metal pieces made internally. 7. The quality of the metal pieces purchased from suppliers. 8. Depreciation on equipment used to make metal pieces. 9· The labor contract with production workers. 10. The selling prices of tables.

Explanation / Answer

Points relevant for the decision making are:

3. Cost of buying metail pieces from suppliers.

4. Rent revenue for the space freed up if the metal pieces are not made internally

6. The quality of the metal pieces made internally

7. The quality of the metal pieces purchased from suppliers

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