Managerial Accounting (ACCT 202) Relevant Costing: Make-or-Buy and Special Order Practice Problems
School: Michigan State University
Course: ACCT 202 - Managerial Accounting
Document type: Practice Problems

Overview
A practice packet for exam prep on relevant costing decisions: make-or-buy, special orders, and constrained resource choices using incremental analysis. This note helps students review relevant vs irrelevant costs and avoidable fixed costs, make-or-buy incremental cost comparison, special order pricing and capacity constraints with clear examples and study prompts.

What this document covers
- relevant vs irrelevant costs and avoidable fixed costs
- make-or-buy incremental cost comparison
- special order pricing and capacity constraints
- limiting factor contribution margin per unit of constraint
- opportunity cost and qualitative factors

How to use it
1. classify costs as relevant or irrelevant in 10 short scenarios
2. solve 6 make-or-buy decisions with clear incremental tables
3. evaluate 5 special orders including capacity and overtime cases
4. choose the best product mix under one bottleneck constraint
5. write one sentence conclusion for each problem like an exam response

Common mistakes to avoid
- including sunk costs in the decision
- using full absorption cost instead of incremental cost
- assuming all fixed costs disappear when volume changes
- forgetting opportunity cost when capacity is limited
- ignoring qualitative issues like quality control or supplier risk