Question

Wantage Company makes decorative wedding cakes. The company is considering buying the cakes rather thanbaking Fixed costs are primarily the depreciation on kitchen equipment such as ovens and mixers. Wantage expects to retain them, which will allow it to concentrate on decorating. The company averages 100 wedding cakes per year and incurs the the equipment. Wantage can buy the cakes for $21 following costs from baking wedding cakes: EEB (Click the icon to view the costs.) 11.Should Wantage make the cakes or buy them? Why? 12. If Wantage decides to buy the cakes, what are some qualitative factors that Wantage shoukd also consider? 11. Should Wantage make the cakes or buy them? Why? (For the Difference column, use a minus sign or parentheses only when the cost of outsourcing exceeds the cost of making the cakes in-house.) Make Outsource Difference (make-outsource) Data Table Cake costs cakes cakes Variable costs: Direct materials Direct labor Variable manufacturing overhead Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total manufacturing cost Number of cakes Cost per cake 700 750 175 1,150 Purchase cost Total differential cost of cakes S 2.775 100 28 Wantage continue to make the cakes. Outsourcing will 12. If Wantage decides to buy the cakes, what are some qualitative factors that Wantage should also consider? O A. Qualitative factors include quality and on-time delivery. O B. Qualitative factors include contribution margins of the various products produced. O C. Qualitative factors include separating fixed and variable costs. 0 D. Qualitative factors include considering sunk costs and manager's opinions. Print Done Enter any number in the edit fields and then continue to the next question.

For the Wantage boxes drop down options are should or should not for the first drop down and for the second box it is decrease profit by $475 or increase profit by $475.

Answer 1

11	Cake cost	Make cakes	Outsource cakes	Difference (Make - Outsource)
	Variable costs:
	Direct materials	$           700		$            700
	Direct labor	$           750		$            750
	Variable manufacturing overhead	$           175		$            175
	Purchase cost (100 X $21)		$       2,100	$       -2,100
	Total differential cost of cakes	$       1,625	$       2,100	$           -475
	Wantage should continue to make the cakes. Outsourcing will decrease profit by $475
12	Correct answer is: A. Qualitative factors include Quality and on - time delivery