A restaurant bakes its own bread for a cost of $152 per unit (100 loaves), including fixed costs of $34 per unit. A proposal is offered to purchase bread from an outside source for $100 per unit, plus $11 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 AnalysisMake 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 a6b98b004fd0039_1 $fill in the blank a6b98b004fd0039_2 $fill in the blank a6b98b004fd0039_3 Delivery fill in the blank a6b98b004fd0039_4 fill in the blank a6b98b004fd0039_5 fill in the blank a6b98b004fd0039_6 Variable costs fill in the blank a6b98b004fd0039_7 fill in the blank a6b98b004fd0039_8 fill in the blank a6b98b004fd0039_9 Fixed factory overhead fill in the blank a6b98b004fd0039_10 fill in the blank a6b98b004fd0039_11 fill in the blank a6b98b004fd0039_12 Total unit costs $fill in the blank a6b98b004fd0039_13 $fill in the blank a6b98b004fd0039_14 $fill in the blank a6b98b004fd0039_15 Determine whether the company should make (Alternative 1) or buy (Alternative 2) the bread.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A restaurant bakes its own bread for a cost of $152 per unit (100 loaves), including fixed costs of $34 per unit. A proposal is offered to purchase bread from an outside source for $100 per unit, plus $11 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 AnalysisMake 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 a6b98b004fd0039_1	$fill in the blank a6b98b004fd0039_2	$fill in the blank a6b98b004fd0039_3
Delivery	fill in the blank a6b98b004fd0039_4	fill in the blank a6b98b004fd0039_5	fill in the blank a6b98b004fd0039_6
Variable costs	fill in the blank a6b98b004fd0039_7	fill in the blank a6b98b004fd0039_8	fill in the blank a6b98b004fd0039_9
Fixed factory overhead	fill in the blank a6b98b004fd0039_10	fill in the blank a6b98b004fd0039_11	fill in the blank a6b98b004fd0039_12
Total unit costs	$fill in the blank a6b98b004fd0039_13	$fill in the blank a6b98b004fd0039_14	$fill in the blank a6b98b004fd0039_15

Determine whether the company should make (Alternative 1) or buy (Alternative 2) the bread.

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