In deciding whether to produce a part internally or buy it from an external source, a cost that is irrelevant is:

i. direct materials

ii. avoidable costs

iii. cost that will continue irrespective of decision made

iv. common or allocated fixed costs

Multiple Choice

• ii and iii

• i only

• iii only

• iii and iv

• i, ii and iii

  Once the break-even point has been reached, operating income will increase by the:

  Multiple Choice

• Unit contribution margin for each additional unit sold

• Change in sales dollars

• Margin of safety amount

• Variable cost per unit for each additional unit sold

• Average fixed cost for each additional unit sold

Craig Company Inc. earns a contribution margin ratio of 36% on its main product is sold at $120 per unit. Assume that the annual break-even point is 80,000 units. Required: 1. Compute the annual total fixed costs. Annual fixed costs 2. What is the contribution margin for every unit sold beyond the break-even point? (Round your answer to 2 decimal places). Contribution margin per unit