The Application of Costs in Make-or-Buy Decisions

An Analysis

John A. Brierley, Christopher Cowton, Colin Drury

Research output: Contribution to journalArticle

Abstract

There has been little recent empirical research which has examined the application of costs in make-or-buy decisions. This paper presents the results of a questionnaire survey with 256 British management accountants and interviews with 55 of them that gather evidence about the application of costs in make-or-buy decisions. The results of the questionnaire show that, in general, direct, manufacturing or total costs or some combination thereof are used in make-or-buy decisions. The interviews showed that in some cases that costs may be used inappropriately when the costs include allocated and assigned overheads and this might lead to sub-optimal decisions.
Original languageEnglish
Pages (from-to)794-800
Number of pages7
JournalInternational Journal of Management
Volume23
Issue number4
Publication statusPublished - Dec 2006

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Make or buy decisions
Costs
Empirical research
Management accountant
Questionnaire
Manufacturing
Questionnaire survey

Cite this

Brierley, John A. ; Cowton, Christopher ; Drury, Colin. / The Application of Costs in Make-or-Buy Decisions : An Analysis. In: International Journal of Management. 2006 ; Vol. 23, No. 4. pp. 794-800.
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The Application of Costs in Make-or-Buy Decisions : An Analysis. / Brierley, John A. ; Cowton, Christopher; Drury, Colin.

In: International Journal of Management, Vol. 23, No. 4, 12.2006, p. 794-800.

Research output: Contribution to journalArticle

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