When evaluating whether to make a component in-house or buy it from an external supplier (Make or Buy decision), which of the following costs represents an "avoidable cost" that is relevant to the decision?

Correct answer: C) The variable manufacturing costs and specific fixed overheads that would be saved if production is stopped.

Explanation

Avoidable costs are costs that can be saved if a particular activity is discontinued. In a make-or-buy decision, the relevant costs of making the item are the variable costs and specific fixed costs that the company will avoid if it chooses to buy externally.