Business Opportunity #2, Make or Buy: Moon Dog Cake Company’s request got Mr. Suncat to thinking! Suncat Cake Shop is well known throughout the Albuquerque area for their beautifully decorated wedding cakes. Mr. Suncat is now wondering if the Cake Shop should solely concentrate on decorating the wedding cakes instead of making, baking, and decorating the cakes. In talking with Moon Dog Cake Company, Mr. Moon Dog quoted a price of $85 to Mr. Suncat for an undecorated wedding cake. Mr. Suncat knows that his direct material and direct labor to just make and bake a wedding cake is $65 and that total manufacturing overhead to just make and bake a wedding cake is $70, of which 25% are variable costs. Should Mr. Suncat continue to make/bake the wedding cakes, or should he buy the undecorated wedding cakes from Moon Dog Cake Company and why? Show all calculations to support your answer.
Business Opportunity #2, Make or Buy:
Moon Dog Cake Company’s request got Mr. Suncat to thinking! Suncat Cake Shop is well known throughout the Albuquerque area for their beautifully decorated wedding cakes. Mr. Suncat is now wondering if the Cake Shop should solely concentrate on decorating the wedding cakes instead of making, baking, and decorating the cakes.
In talking with Moon Dog Cake Company, Mr. Moon Dog quoted a price of $85 to Mr. Suncat for an undecorated wedding cake.
Mr. Suncat knows that his direct material and direct labor to just make and bake a wedding cake is $65 and that total manufacturing
Should Mr. Suncat continue to make/bake the wedding cakes, or should he buy the undecorated wedding cakes from Moon Dog Cake Company and why? Show all calculations to support your answer.
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