6. Full cost is: a. The sum of variable and fixed cost per unit. b. Always relevant for short-run decisions. c. Useful for long-run pricing decisions. d. Both a and c. 7. In a competitive market where firms are price takers a. Each firm can set its own prices b. Target pricing is appropriate. c. Target cost must be achieved in the short run. d. Cost-based pricing should be adopted. Use the following information to answer questions 8 and 9 Company B is considering whether to outsource Part#375 needed to produce finished products. If manufactured internally, it will cost direct materials $2 per unit, direct labor $1.20 per unit, variable overhead $1.50 per unit, and fixed overhead $18,000. An outside supplier is available to provide between 5,000 and 50,000 units of Part#375 at $6.20 per unit. 8. At what volume will Company B become indifferent to the make-or-buy choice? a. 8,000 units. b. 12,000 units. c. 20,000 units. d. 31,000 units. If Company B needs 8,000 units of Part#375, and outsourcing saves only 25% of the fixed overhead, then Company B's make-or-buy decision and cost advantage are: 9. a. Make, $7,500. b. Make, S6,000. c. Buy, $2,000. d. Buy, $4,000. 10. The theory of constraints (TOC): a. Applies to long-run cost management. b. Is concerned with improving bottleneck operations c. Tries to minimize throughput contribution. d. Considers most salaries and wages, rent, utilities and depreciation to be variable