Cost to make = [($0.724 + $0.490) X 270,000] + $96,120 = $423,900
Cost to purchase = ($1.40 X 270,000) + $25,000 = $403,000
Cost to purchase is less than cost to make.
Gain = $423,900 - $403,000 = $20,900
Offer should be accepted because cost is less by $20,900
1st option.
French Hyros (pronounced Hero's) is chain or fast food restaurant specializing in gyros with a French...
French Hyros (pronounced Hero’s) is chain or fast food restaurant specializing in gyros with a French flavor profile. The four most popular gyros sold are the Depardieu, the Bellanger, the Francois, and the Zidane. Peta bread is made in each location and is the single costliest item. Materials cost = $0.724/unit (pita bread only) Labor cost = $0.490/unit (pita bread only) Overhead = $96,120/year (pita bread only) An outside supplier has approached you and has bid $1.40/unit plus an upfront...
A potato processing firm is supplying French fries to a fast food restaurant chain. In the short run under its current facility constraint, each day it can produce the first 1 unit for $2000 variable cost, the second unit for $1500, the third unit for $1900, the fourth unit for $2100, the fifth unit for $2500, and the six unit at $3000 to reach full capacity. The price it sells to the restaurant chain is $2500/unit. The per day (very...