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Business, 28.12.2019 02:31 prettyswagg63oz3tyz
Suppose seafood houseseafood house restaurant is considering whether to (1) bake bread for its restaurant in-house or (2) buy the bread from a local bakery. the chef estimates that variable costs of making each loaf include $ 0.54$0.54 of ingredients, $ 0.24$0.24 of variable overhead (electricity to run the oven), and $ 0.74$0.74 of direct labor for kneading and forming the loaves. allocating fixed overhead (depreciation on the kitchen equipment and building) based on direct labor, seafood houseseafood house assigns $ 1.00$1.00 of fixed overhead per loaf. none of the fixed costs are avoidable. the local bakery would charge $ 1.80$1.80 per loaf.1. what is the absorption cost of making the bread in-house? what is the variable cost per loaf? 2. should olive yard bake the bread n-house or buy from the local bakery? why? 3. in addition to the financial analysis, what else should olive yard consider when making this decision?
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