Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. structuring a make-or-buy problem fresh foods, a l

Structuring a Make-or-Buy Problem Fresh Foods, a large restaurant chain, needs to determine if it...

60.1K

Verified Solution

Question

Accounting

Structuring a Make-or-Buy Problem Fresh Foods, a large restaurant chain, needs to determine if it would be cheaper to produce 5,000 units of its main food ingredient for use in its restaurants or to purchase them from an outside supplier for $12 each. Cost information on internal production includes the following: Total Cost Unit Cost Direct materials $25,000 $ 5.00 Direct labor 15,000 3.00 Variable manufacturing overhead 7,500 1.50 Variable marketing overhead 10,000 2.00 Fixed plant overhead 30,000 6.00 Total $87,500 $17.50 Fixed overhead will continue whether the ingredient is produced internally or externally. No additional costs of purchasing will be incurred beyond the purchase price. Required: 1. What are the alternatives for Fresh Foods? 2. List the relevant cost(s) of internal production and of external purchase. 3. Which alternative is more cost effective? By how much? $ 4. Now assume that 20% of the fixed overhead can be avoided if the ingredient is purchased externally. Which alternative is more cost effective? By how much? $

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Statistics
1.2K views

Using the data below, calculate the appropriate test. Do this manually and show all steps. You...

Statistics
1.2K views

15 A store manager records the number of customers at the store each week for...

Calculus
1.2K views

1 point If F V 2x y find F dr where C is the quarter...

Algebra
1.2K views

B GIVEN f x X 7x45x 55x 126x 72 FIND SPSEACH 96 32x 66X 5X...

Algebra
1.2K views

Exercises 111 118 Determine if y is a function of x 111 x y 112...

Accounting
1.2K views

Gilpatric Corporation produces and sells two products. In the most recent month, Product Q71M had...

Accounting
1.2K views

On 1 January 2018, MANAL and ABRAR entered into a partnership contributing $350,000 and $250,000...

Accounting
1.2K views

solve for the yellow square as well as part 4 Q: what critisicism can be...

Accounting
1.2K views

The statement prepared to check the arithmetical accuracy of the ledger accounts is called (1...

Accounting
1.2K views

help please Terminal Industries (Ti) produces a product...

Accounting
1.2K views

If a company issues a 20% stock dividend when you are holding 2,000 shares of...

Accounting
1.2K views

According to Figure 174,B is the performance measure referred to as Figure 17-4 Multiple Choice...