Make or Buy A restaurant bakes its own bread for a cost of $156 per unit (100 loaves), including fixed costs of $34 per unit. A proposal is offered to purchase bread from an outside source for $101 per unit, plus $12 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. 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 on Income (Alternative 2) Sales price $0 $0 $0 Unit Costs: Purchase price $ $ $ Delivery Variable costs Fixed factory overhead Income (Loss) $ $ $ Determine whether the company should make (Alternative 1) or buy (Alternative 2) the bread.
Make or Buy A restaurant bakes its own bread for a cost of $156 per unit (100 loaves), including fixed costs of $34 per unit. A proposal is offered to purchase bread from an outside source for $101 per unit, plus $12 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. 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 on Income (Alternative 2) Sales price $0 $0 $0 Unit Costs: Purchase price $ $ $ Delivery Variable costs Fixed factory overhead Income (Loss) $ $ $ Determine whether the company should make (Alternative 1) or buy (Alternative 2) the bread.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Make or Buy
A restaurant bakes its own bread for a cost of $156 per unit (100 loaves), including fixed costs of $34 per unit. A proposal is offered to purchase bread from an outside source for $101 per unit, plus $12 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. 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 on Income (Alternative 2) |
|
| Sales price | $0 | $0 | $0 |
| Unit Costs: | |||
| Purchase price | $ | $ | $ |
| Delivery | |||
| Variable costs | |||
| Fixed factory |
|||
| Income (Loss) | $ | $ | $ |
Determine whether the company should make (Alternative 1) or buy (Alternative 2) the bread.
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