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FBbgtO Suppose Italian Grill restaurant is considering whether to (1) bake bread for its restaurant in-house or (2) buy the bread from a local bakery. The chef estimates that variable costs of making each loaf include $0.56 of ingredients, $0.21 of variable overhead (electricity to run the oven), and $0.75 of direct labor for kneading and forming the loaves. Allocating fixed overhead (depreciation on the kitchen equipment and building) based on direct labor, Italian Grill assigns $0.99 of fixed overhead per loaf. None of the fixed costs are avoidable. The local bakery would charge $1.84 per loaf. Read the requirements. C... Cost per unit Requirement 2. Should Italian Grill bake the bread in-house or buy from the local bakery? Why? Decision: since the of making each loaf is Requirement 3. In addition to the financial analysis, what else should Italian Grill consider when making this decision? Italian Grill should consider the following qualitative factors before making a final decision: OA. Will the local bakery meet their delivery time requirements? OB. How does the quality and freshness of the local bakery bread compare to Italian Grill bread? OC. Both A and B OD. None of the above possible the cost of outsourcing each loaf 4

FBbgtO Suppose Italian Grill restaurant is considering whether to (1) bake bread for its restaurant in-house or (2) buy the bread from a local bakery. The chef estimates that variable costs of making each loaf include $0.56 of ingredients, $0.21 of variable overhead (electricity to run the oven), and $0.75 of direct labor for kneading and forming the loaves. Allocating fixed overhead (depreciation on the kitchen equipment and building) based on direct labor, Italian Grill assigns $0.99 of fixed overhead per loaf. None of the fixed costs are avoidable. The local bakery would charge $1.84 per loaf. Read the requirements. C... Cost per unit Requirement 2. Should Italian Grill bake the bread in-house or buy from the local bakery? Why? Decision: since the of making each loaf is Requirement 3. In addition to the financial analysis, what else should Italian Grill consider when making this decision? Italian Grill should consider the following qualitative factors before making a final decision: OA. Will the local bakery meet their delivery time requirements? OB. How does the quality and freshness of the local bakery bread compare to Italian Grill bread? OC. Both A and B OD. None of the above possible the cost of outsourcing each loaf 4

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter2: Building Blocks Of Managerial Accounting
Section: Chapter Questions
Problem 4EA: Hicks Contracting collects and analyzes cost data in order to track the cost of installing decks on...
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FBbbed by Suppose Italian Grill restaurant is considering whether to (1) bake bread for its restaurant in-house or (2) buy the bread from a local bakery. The chef estimates that variable costs of making each loaf include $0.56 of ingredients, $0.21 of variable overhead (electricity to run the oven), and $0.75 of direct labor for kneading and forming the loaves. Allocating fixed overhead (depreciation on the kitchen equipment and building) based on direct labor, Italian Grill assigns $0.99 of fixed overhead per loaf. None of the fixed costs are avoidable. The local bakery would charge $1.84 per loaf. Read the requirements. Cost per unit Requirement 2. Should Italian Grill bake the bread in-house or buy from the local bakery? Why? Decision: ... since the of making each loaf is Requirement 3. In addition to the financial analysis, what else should Italian Grill consider when making this decision? Italian Grill should consider the following qualitative factors before making a final decision: OA. Will the local bakery meet their delivery time requirements? OB. How does the quality and freshness of the local bakery bread compare to Italian Grill bread? OC. Both A and B OD. None of the above es possible the cost of outsourcing each loaf.
Transcribed Image Text:FBbbed by Suppose Italian Grill restaurant is considering whether to (1) bake bread for its restaurant in-house or (2) buy the bread from a local bakery. The chef estimates that variable costs of making each loaf include $0.56 of ingredients, $0.21 of variable overhead (electricity to run the oven), and $0.75 of direct labor for kneading and forming the loaves. Allocating fixed overhead (depreciation on the kitchen equipment and building) based on direct labor, Italian Grill assigns $0.99 of fixed overhead per loaf. None of the fixed costs are avoidable. The local bakery would charge $1.84 per loaf. Read the requirements. Cost per unit Requirement 2. Should Italian Grill bake the bread in-house or buy from the local bakery? Why? Decision: ... since the of making each loaf is Requirement 3. In addition to the financial analysis, what else should Italian Grill consider when making this decision? Italian Grill should consider the following qualitative factors before making a final decision: OA. Will the local bakery meet their delivery time requirements? OB. How does the quality and freshness of the local bakery bread compare to Italian Grill bread? OC. Both A and B OD. None of the above es possible the cost of outsourcing each loaf.
Suppose Italian Grill restaurant is considering whether to (1) bake bread for its restaurant in-house or (2) buy the bread from a local bakery. The chef estimates that variable costs of making each loaf include $0.56 of ingredients, $0.21 of variable overhead (electricity to run the oven), and $0.75 of direct labor for kneading and forming the loaves. Allocating fixed overhead (depreciation on the kitchen equipment and building) based on direct labor, Italian Grill assigns $0.99 of fixed overhead per loaf. None of the fixed costs are avoidable. The local bakery would charge $1.84 per loaf. Read the requirements. Requirements 1. What is the unit cost of making the bread in-house? Complete the following outsourcing decision analysis to determine Italian Grill's unit cost of making the bread. Direct material Direct labor Italian Grill Outsourcing Decision Variable overhead Variable cost per unit Plus: Fixed overhead per unit Cost per unit K
Transcribed Image Text:Suppose Italian Grill restaurant is considering whether to (1) bake bread for its restaurant in-house or (2) buy the bread from a local bakery. The chef estimates that variable costs of making each loaf include $0.56 of ingredients, $0.21 of variable overhead (electricity to run the oven), and $0.75 of direct labor for kneading and forming the loaves. Allocating fixed overhead (depreciation on the kitchen equipment and building) based on direct labor, Italian Grill assigns $0.99 of fixed overhead per loaf. None of the fixed costs are avoidable. The local bakery would charge $1.84 per loaf. Read the requirements. Requirements 1. What is the unit cost of making the bread in-house? Complete the following outsourcing decision analysis to determine Italian Grill's unit cost of making the bread. Direct material Direct labor Italian Grill Outsourcing Decision Variable overhead Variable cost per unit Plus: Fixed overhead per unit Cost per unit K
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