1. Marigold Company has contacted Ivanhoe Inc. with an offer to sell it 4200 of the wickets for $17.00 each. If Ivanhoe makes the wickets, variable costs are $11 per unit. Fixed costs are $11 per unit however $5 per unit is avoidable. Should Ivanhoe make or buy the wickets? What are the savings of this choice?

Buy; savings = $21000

Buy; savings = $4200

Make; savings = $8400

Make; savings = $4200

2. Crane Inc. can produce 100 units of a component part with the following costs:

Direct Materials	$29000
Direct Labour	12000
Variable Overhead	31000
Fixed Overhead	21000

If Crane Inc. purchases the units externally for $79000, by what amount will its total costs change? Fixed costs are not avoidable if they purchase externally.

an increase of $79000

an increase of $7000

an increase of $17000

a decrease of $21000

3.

Ed Bonita Corporation has two divisions; Outdoor Sports and Indoor Sports. The sales mix is 60% for Outdoor Sports and 40% for Indoor Sports. Bonita incurs $2490000 in fixed costs. The contribution margin ratio for the Outdoor Sports Division is 20%, while for the Indoor Sports Division it is 50%. What will be the total contribution margin at the break-even point?

$996000

$1494000

$2490000

$4980000

4.

Brad Concord Corporation sells two types of computers; one is designed for audio applications and the other for video applications. Concord incurs $295120 in fixed costs. Per-unit data on the two products is presented blow:

Unit data	Audio computer	Video computer
Selling price	$1480	$1710
Variable costs	1060	1220
Contribution margin	$420	$490
Sales mix	80%	20%

The break-even point in units is

249.

649.

680.

1000.