Suppose Country Cafe 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 $0.44 of ingredients, $0.28 of variable overhead (electricity run the oven), and $0.72 of direct labor for kneading and forming the loaves. Allocating fixed overhead (depreciation in the kitchen equipment and building) bases on the direct labor, County Cafe l assigns $1.05 of fixed overheard per loaf. None of the fixed costs are avoidable. The local bakery would charge $1.72 per loaf. Requirement 3. In addition to the financial analysis what else should Country Cafe consider when making this decision? Country Cafe should consider the following qualitative factors before making a final decision: A. Will the local bakery meet their delivery time requirements ? B.How does the quality and freshness of the local bakery bread compare to Country Cate bread? C. Both A and B D.None of the above
Suppose Country Cafe 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 $0.44 of ingredients, $0.28 of variable overhead (electricity run the oven), and $0.72 of direct labor for kneading and forming the loaves. Allocating fixed overhead (depreciation in the kitchen equipment and building) bases on the direct labor, County Cafe l assigns $1.05 of fixed overheard per loaf. None of the fixed costs are avoidable. The local bakery would charge $1.72 per loaf. Requirement 3. In addition to the financial analysis what else should Country Cafe consider when making this decision? Country Cafe should consider the following qualitative factors before making a final decision: A. Will the local bakery meet their delivery time requirements ? B.How does the quality and freshness of the local bakery bread compare to Country Cate bread? C. Both A and B D.None of the above
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter2: Basic Cost Management Concepts
Section: Chapter Questions
Problem 11E: Nizam Company produces speaker cabinets. Recently, Nizam switched from a traditional departmental...
Related questions
Question
Suppose Country Cafe 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 $0.44 of ingredients, $0.28 of variable overhead (electricity run the oven), and $0.72 of direct labor for kneading and forming the loaves. Allocating fixed overhead (depreciation in the kitchen equipment and building) bases on the direct labor, County Cafe l assigns $1.05 of fixed overheard per loaf. None of the fixed costs are avoidable. The local bakery would charge $1.72 per loaf.
Requirement 3. In addition to the financial analysis what else should Country Cafe consider when making this decision?
Country Cafe should consider the following qualitative factors before making a final decision:
A. Will the local bakery meet their delivery time requirements ?
B.How does the quality and freshness of the local bakery bread compare to Country Cate bread?
C. Both A and B
D.None of the above
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College