Answered: A restaurant bakes its own bread for a…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter11: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 3BE: Make or buy A company manufactures various-sized plastic bottles for its medicinal product. The...

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Question

Make or Buy

A restaurant bakes its own bread for a cost of $160 per unit (100 loaves), including fixed costs of $32 per unit. A proposal is offered to purchase bread from an outside source for $97 per unit, plus $8 per unit for delivery.

Prepare a differential analysis dated July 7 to determine whether the company should Make Bread (Alternative 1) or Buy Bread (Alternative 2), assuming that fixed costs are unaffected by the decision. If an amount is zero, enter "0". For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Differential Analysis

Make Bread (Alt. 1) or Buy Bread (Alt. 2)

July 7

	Make Bread (Alternative 1)	Buy Bread (Alternative 2)	Differential Effect (Alternative 2)
Unit Costs:
Purchase price	$fill in the blank	$fill in the blank	$fill in the blank
Delivery	fill in the blank	fill in the blank	fill in the blank
Variable costs	fill in the blank	fill in the blank	fill in the blank
Fixed factory overhead	fill in the blank	fill in the blank	fill in the blank
Total unit costs	$fill in the blank	$fill in the blank	$fill in the blank

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