Business & ManagementIB

Cost to buy vs. cost to make

If Cost to Buy (CTB) is greater than Cost to Make (CTM), then it is more financially desirable to ‘make’. If the cost of producing the product is lower than the supplier’s price, it makes more financial sense to make the product rather than...
Cost to buy vs. cost to make

Cost to buy

Cost to buy = Price × Quantity

Cost to make

Cost to make = Fixed costs + (Average variable cost × Quantity)


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