Make or Buy A restaurant bakes its own bread for a cost of $168 per unit (100 loaves), including fixed costs of $36 per unit. A proposal is offered to purchase bread from an outside source for $98 per unit, plus $9 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 $fill in the blank c067b9003ffaff2_1 $fill in the blank c067b9003ffaff2_2 $fill in the blank c067b9003ffaff2_3 Delivery fill in the blank c067b9003ffaff2_4 fill in the blank c067b9003ffaff2_5 fill in the blank c067b9003ffaff2_6 Variable costs fill in the blank c067b9003ffaff2_7 fill in the blank c067b9003ffaff2_8 fill in the blank c067b9003ffaff2_9 Fixed factory overhead fill in the blank c067b9003ffaff2_10 fill in the blank c067b9003ffaff2_11 fill in the blank c067b9003ffaff2_12 Income (Loss) $fill in the blank c067b9003ffaff2_13 $fill in the blank c067b9003ffaff2_14 $fill in the blank c067b9003ffaff2_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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Make or Buy

A restaurant bakes its own bread for a cost of $168 per unit (100 loaves), including fixed costs of $36 per unit. A proposal is offered to purchase bread from an outside source for $98 per unit, plus $9 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	$fill in the blank c067b9003ffaff2_1	$fill in the blank c067b9003ffaff2_2	$fill in the blank c067b9003ffaff2_3
Delivery	fill in the blank c067b9003ffaff2_4	fill in the blank c067b9003ffaff2_5	fill in the blank c067b9003ffaff2_6
Variable costs	fill in the blank c067b9003ffaff2_7	fill in the blank c067b9003ffaff2_8	fill in the blank c067b9003ffaff2_9
Fixed factory overhead	fill in the blank c067b9003ffaff2_10	fill in the blank c067b9003ffaff2_11	fill in the blank c067b9003ffaff2_12
Income (Loss)	$fill in the blank c067b9003ffaff2_13	$fill in the blank c067b9003ffaff2_14	$fill in the blank c067b9003ffaff2_15

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

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