Question

4. Why does fixed cost per unit information sometimes lead to mistakes in business decisions? O Fixed costs per unit make a product or department appear unprofitable. O Fixed costs per unit look like variable costs. O Fixed costs per unit look less important than out-of-pocket costs. O Fixed costs per unit create opportunity costs. 5. Robert Company is considering buying an input to its main product from an outside supplier, rather than producing the input itself. If Robert Company purchases the part elsewhere, it can use the capacity currently being used to produce the input to generate additional profit of $22,000. When considering this decision, Robert Co. managers should: O Consider the $22,000 as a cost of purchasing the input from the outside supplier. O Ignore the $22,000. O Consider the $22,000 as a cost of making the input. Include the $22,000 as both a cost of making the input and a benefit of purchasing the input from the outside supplier.

Answer 1

Ans4) Fixed cost per unit make a product or deparment appear unprofitable.

Ans5) Include the $22000 as both a cost of making the input and a benefit of purchasing the input from the outside supplier.