23. Del’s Diner purchases cookies that it includes in box lunches it prepares and sells. Del...
23. Del’s Diner purchases cookies that it includes in box lunches it prepares and sells. Del presently buys the cookies for $0.60 each but is considering making them instead. Del’s kitchen has excess capacity that would allow them to make the cookies rather than buy them and has determined that fixed overhead would not increase if the cookies were made in-house.
By analysis, Del estimates the full absorption cost to bake each cookie in-house will be:
Materials $0.20
Labor 0.15
Variable O.H. 0.15
Allocated fixed O.H. 0.30
Total Cost/cookie $0.80
Del is willing to make the cookies, but doesn’t believe it’s an economical decision based on the analysis above—this leads him to believe he should continue purchasing cookies for $0.60 each. He asks your expert opinion.
What would you advise Del? Prepare a schedule to show the differential costs between the two alternatives and state your conclusion (earnable credit lies in the schedule). What should Del do, and why concerning the make or buy cookie decision?
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23. Del’s Diner purchases cookies that it includes in box
lunches it prepares and sells. Del...
Mel’s Meals 2 Go purchases cookies that it includes in the 10,000 box lunches it prepares...
Mel’s Meals 2 Go purchases cookies that it includes in the 10,000 box lunches it prepares and sells annually. Mel’s kitchen and adjoining meeting room operate at 70 percent of capacity. Mel’s purchases the cookies for $0.78 each but is considering making them instead. Mel’s can bake each cookie for $0.28 for materials, $0.15 for direct labor, and $0.53 for overhead without increasing its capacity. The $0.53 for overhead includes an allocation of $0.34 per cookie for fixed overhead. However,...
Mel’s Meals 2 Go purchases cookies that it includes in the 10,000 box lunches it prepares...
Mel’s Meals 2 Go purchases cookies that it includes in the 10,000 box lunches it prepares and sells annually. Mel’s kitchen and adjoining meeting room operate at 70 percent of capacity. Mel’s purchases the cookies for $0.78 each but is considering making them instead. Mel’s can bake each cookie for $0.28 for materials, $0.15 for direct labor, and $0.53 for overhead without increasing its capacity. The $0.53 for overhead includes an allocation of $0.34 per cookie for fixed overhead. However,...
Required information [The following information applies to the questions displayed below.] Mel’s Meals 2 Go purchases...
Required information
[The following information applies to the questions displayed
below.]
Mel’s Meals 2 Go purchases cookies that it includes in the
10,000 box lunches it prepares and sells annually. Mel’s kitchen
and adjoining meeting room operate at 70 percent of capacity. Mel’s
purchases the cookies for $0.60 each but is considering making them
instead. Mel’s can bake each cookie for $0.20 for materials, $0.15
for direct labor, and $0.45 for overhead without increasing its
capacity. The $0.45 for overhead...
[The following information applies to the questions displayed below.) Mel's Meals 2 Go purchases cookies that...
[The following information applies to the questions displayed below.) Mel's Meals 2 Go purchases cookies that it includes in the 10,000 box lunches it prepares and sells annually. Mel's kitchen and adjoining meeting room operate at 70 percent of capacity. Mel's purchases the cookies for $0.66 each but is considering making them instead. Mel's can bake each cookie for $0.20 for materials, $0.18 for direct labor, and $0.63 for overhead without increasing its capacity. The $0.63 for overhead includes an...
requirea information The following information applies to the questions displayed below.) Mel's Meals 2 Go purchases...
requirea information The following information applies to the questions displayed below.) Mel's Meals 2 Go purchases cookies that it includes in the 10,000 box lunches it prepares and sells annually. Mel's kitchen and adjoining meeting room operate at 70 percent of capacity. Mel's purchases the cookies for $0.60 each but is considering making them instead. Mel's can bake each cookie for $0.20 for materials, $0.15 for direct labor, and $0.45 for overhead without increasing its capacity. The $0.45 for overhead...
Required information [The following information applies to the questions displayed below.] Mel’s Meals 2 Go purchases...
Required information [The following information applies to the questions displayed below.] Mel’s Meals 2 Go purchases cookies that it includes in the 10,000 box lunches it prepares and sells annually. Mel’s kitchen and adjoining meeting room operate at 70 percent of capacity. Mel’s purchases the cookies for $0.86 each but is considering making them instead. Mel’s can bake each cookie for $0.33 for materials, $0.15 for direct labor, and $0.57 for overhead without increasing its capacity. The $0.57 for overhead...
Required Information (The following information applies to the questions displayed below.) Mel's Meals 2 Go purchases...
Required Information (The following information applies to the questions displayed below.) Mel's Meals 2 Go purchases cookies that it includes in the 10,000 box lunches it prepares and sells annually. Mel's kitchen and adjoining meeting room operate at 70 percent of capacity. Mel's purchases the cookies for $0.66 each but is considering making them instead. Mel's can bake each cookle for $0.20 for materials, $0.18 for direct labor, and $0.63 for overhead without increasing its capacity. The $0.63 for overhead...
Required information (The following information applies to the questions displayed below.) Mel's Meals 2 Go purchases...
Required information (The following information applies to the questions displayed below.) Mel's Meals 2 Go purchases cookies that it includes in the 10,000 box lunches it prepares and sells annually. Mel's kitchen and adjoining meeting room operate at 70 percent of capacity. Mel's purchases the cookies for $0.66 each but is considering making them instead. Mel's can bake each cookie for $0.20 for materials, $0.18 for direct labor, and $0.63 for overhead without increasing its capacity. The $0.63 for overhead...
! Required information [The following information applies to the questions displayed below.) Mel's Meals 2 Go...
! Required information [The following information applies to the questions displayed below.) Mel's Meals 2 Go purchases cookies that it includes in the 10,000 box lunches it prepares and sells annually. Mel's kitchen and adjoining meeting room operate at 70 percent of capacity. Mel's purchases the cookies for $0.78 each but is considering making them instead. Mel's can bake each cookie for $0.28 for materials, $0.15 for direct labor, and $0.53 for overhead without increasing its capacity. The $0.53 for...
Required information (The following information applies to the questions displayed below.) Mel's Meals 2 Go purchases...
Required information (The following information applies to the questions displayed below.) Mel's Meals 2 Go purchases cookies that it includes in the 10,000 box lunches it prepares and sells annually. Mel's kitchen and adjoining meeting room operate at 70 percent of capacity. Mel's purchases the cookies for $0.66 each but is considering making them instead. Mel's can bake each cookie for $0.20 for materials, $0.18 for direct labor, and $0.63 for overhead without increasing its capacity. The $0.63 for overhead...
Required information
[The following information applies to the questions displayed
below.]
Mel’s Meals 2 Go purchases cookies that it includes in the
10,000 box lunches it prepares and sells annually. Mel’s kitchen
and adjoining meeting room operate at 70 percent of capacity. Mel’s
purchases the cookies for $0.60 each but is considering making them
instead. Mel’s can bake each cookie for $0.20 for materials, $0.15
for direct labor, and $0.45 for overhead without increasing its
capacity. The $0.45 for overhead...
[The following information applies to the questions displayed below.) Mel's Meals 2 Go purchases cookies that it includes in the 10,000 box lunches it prepares and sells annually. Mel's kitchen and adjoining meeting room operate at 70 percent of capacity. Mel's purchases the cookies for $0.66 each but is considering making them instead. Mel's can bake each cookie for $0.20 for materials, $0.18 for direct labor, and $0.63 for overhead without increasing its capacity. The $0.63 for overhead includes an...
requirea information The following information applies to the questions displayed below.) Mel's Meals 2 Go purchases cookies that it includes in the 10,000 box lunches it prepares and sells annually. Mel's kitchen and adjoining meeting room operate at 70 percent of capacity. Mel's purchases the cookies for $0.60 each but is considering making them instead. Mel's can bake each cookie for $0.20 for materials, $0.15 for direct labor, and $0.45 for overhead without increasing its capacity. The $0.45 for overhead...
Required Information (The following information applies to the questions displayed below.) Mel's Meals 2 Go purchases cookies that it includes in the 10,000 box lunches it prepares and sells annually. Mel's kitchen and adjoining meeting room operate at 70 percent of capacity. Mel's purchases the cookies for $0.66 each but is considering making them instead. Mel's can bake each cookle for $0.20 for materials, $0.18 for direct labor, and $0.63 for overhead without increasing its capacity. The $0.63 for overhead...
Required information (The following information applies to the questions displayed below.) Mel's Meals 2 Go purchases cookies that it includes in the 10,000 box lunches it prepares and sells annually. Mel's kitchen and adjoining meeting room operate at 70 percent of capacity. Mel's purchases the cookies for $0.66 each but is considering making them instead. Mel's can bake each cookie for $0.20 for materials, $0.18 for direct labor, and $0.63 for overhead without increasing its capacity. The $0.63 for overhead...
! Required information [The following information applies to the questions displayed below.) Mel's Meals 2 Go purchases cookies that it includes in the 10,000 box lunches it prepares and sells annually. Mel's kitchen and adjoining meeting room operate at 70 percent of capacity. Mel's purchases the cookies for $0.78 each but is considering making them instead. Mel's can bake each cookie for $0.28 for materials, $0.15 for direct labor, and $0.53 for overhead without increasing its capacity. The $0.53 for...
Required information (The following information applies to the questions displayed below.) Mel's Meals 2 Go purchases cookies that it includes in the 10,000 box lunches it prepares and sells annually. Mel's kitchen and adjoining meeting room operate at 70 percent of capacity. Mel's purchases the cookies for $0.66 each but is considering making them instead. Mel's can bake each cookie for $0.20 for materials, $0.18 for direct labor, and $0.63 for overhead without increasing its capacity. The $0.63 for overhead...
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