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

FINANCIAL ACCOUNTING
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Author:Libby
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Chapter1: Financial Statements And Business Decisions
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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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