Fifth edition Alnoor Bhimani Charles T. Horngren Srikant M. Datar Madhav V. Rajan Farah Ahamed



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10.4 Quantitative
factors
are outcomes that are measured in numerical terms. Some quantitative factors are financial – that is, they can be easily expressed in financial terms. Direct material is an example of a quantitative financial factor. Qualitative
factors
are factors that are not measured in numerical terms. An example is employee morale.
10.5
No. Some variable costs may not differ among the alternatives under consideration and hence will be irrelevant. Some fixed costs may differ among the alternatives and hence will be relevant.
10.6
No. Some of the total unit costs to manufacture a product maybe fixed costs and hence, will not differ between the make and buy alternatives. These fixed costs are irrelevant to the make-or-buy decision. The key comparison is between purchase costs and the costs that will be saved if the company purchases the component parts from outside.

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