Obj 1 Example Exercise 253 A restaurant bakes its own bread

Obj. 1 Example Exercise 25-3 A restaurant bakes its own bread for a cost of $230 per unit (100 loaves), including fixed costs of $47 per unit. A proposal is offered to purchase bread Mow from an outside source for $180 per unit, plus S18 per unit for delivery. Prepare a differential analysis dated July 7 to determine whether the company should make (Alternative 1) or buy (-Alternative 2) the bread, assuming that fixed costs are unaffected by the decision. How

Solution

Make Buy Differential effect Unit costs: Purchase price -180 -180 Delivery -18 -18 Variable costs -183 183 Fixed factory overhead -47 -47 0 Income(loss) -230 -245 -15 It is recommended to make