1.

In a make or buy (outsourcing) decision, which one of the following considerations is irrelevant?

		If we buy the part from outside, our fixed expenses will drop by half.
		If we buy the part, we can rent our existing production facilities for $600,000.
		When we resell the leftover part, it is more beneficial to sell to Company X rather than Company Y.
		If we make the part, we do not have to worry about the quality of the part or delivery time.
		If we buy the part, we have to rely on other guys for a very important part.

2.

When a firm makes a decision regarding which products to focus on, emphasizing those products with the highest contribution margin per unit of product may result an incorrect decision, when the firm:

		has a limited supply of manufacturing resources.
		has a high level of fixed costs.
		is highly automated.
		has a high level of sunk costs.
		has the ability to make more units.

3.

Use the information given in the above question. But assume that Sky High Seats can sell all of 100,000 seats produced at the regular selling price. When somebody wants the seats, Sky High Seats has to charge at least ________ per seat (in order to maximize the profit of Sky High Seats).

		$400
		$395
		$220
		$370
		$350