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ololo11 [35]
3 years ago
6

Suppose a Roasted Olive restaurant is considering whether to (1) bake bread for its restaurant in-house or (2) buy the bread fro

m a local bakery. The chef estimates that variable costs of making each loaf include $.52 of ingredients, $.24 of variable overhead (electricity to run the oven), and $.70 of direct labor for kneading and forming the loaves. Allocating fixed overhead (depreciation on the kitchen equipment and building) based on direct labor assigns $.96 of fixed overhead per loaf. None of the fixed costs are avoidable. The local bakery would charge $1.75 per loaf.
a. What is the unit cost of making the bread in-house (use absorption costing)?
b. Should Roasted Olive bake the bread in-house or buy from the local bakery? Why?
Business
1 answer:
MAVERICK [17]3 years ago
8 0

Answer:

Roasted Olive should  bake the bread in-house.

Because, It is cheaper to bake the bread in-house than to purchase as this saves $0.29 per loaf of bread.

Explanation:

Cost of Making

Unit Cost (Absorption Costing) = All Manufacturing Cost (Fixed and Variable)

                                                   = $0.52 + $0.24 + $0.70 + $0.96

                                                   = $2.42

Cost of Buying from Local Bakery

Note that the fixed costs are note avoidable, meaning that they would be incurred whether or not the bread is made internally or purchased from local Bakery

Cost of Purchase Option per unit :

Purchase Price                             $1.75

Add Fixed Overhead per loaf    $0.96

Total unit cost                              $2.71

Conclusion :

It is cheaper to bake the bread in-house than to purchase as this saves ( $2.71 - $2.42) $0.29 per loaf of bread.

Therefore, Roasted Olive should  bake the bread in-house.

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Explanation:

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The advantage of a limited partnership business structure as opposed to a corporate business structure is:
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D. limited liability

Explanation:

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5 0
2 years ago
Gusler Corporation makes one product and has provided the following information:
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Answer:

$807,500

Explanation:

First determine the cost per unit (U) as a function of cost of materials (M):

M = 2 * $2.00 = $4.00

And cost of labor and overhead (L):

L = 2.7*($20.00+$10.00)

L= $81.00

Total cost per unit is:

U = M + L = $4.00+ $81.00

U = $85.00

The estimate cost of goods sold for the month of May (C) is the product of the cost per unit by the number of units sold during the month (9,500):

C= $85.00*9,500

C= $807,500

Therefore, the estimated cost of goods sold for May is closest to $807,500

8 0
3 years ago
.Andrea sold a piece of machinery she used in her business for 9 months. The amount realized was $50,000 and the adjusted basis
Vinvika [58]

Answer:

Realized loss = $5000

Explanation:

The adjusted basis is the net cost of an asset after it has had depreciation deductions and/or capital expenditure increments. In other words, its actual worth at that particular point in time.

The amount realized is the fair market value and the sum of any money received at the sale of an asset.

A realized gain or loss is the difference between the amount realized from the sale of the asset and the asset's adjusted basis on the time of its sale. A positive figure proves to be a gain and a negative figure proves to be a loss. In other words, when an asset is sold for a price higher than what it is actually worth at the time of sale, it is a realized gain whilst if it is sold for a price lower than what its net cost is, it is a realized loss.

In this case,

$50,000 - $55,000 = $(5000)

There is a realized loss for Andrea of $5000 on the sale of this machinery.

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3 years ago
The first of two major components of developing a marketing strategy is to _______. a. select a target market b. determine a seg
Brrunno [24]

Answer:The first of two major components of developing a marketing strategy is to<u> select a target market.</u>

<u>Explanation:</u> After determining business products and services the business needs to identify the target market. Identifying the target market is the major step in developing a marketing strategy.

Steps to select a target market

  1. Target market is actually those customers whom we want to sell our products.Concentrating on target market will make it easier to sell our products.
  2. Customers can be targeted on the basis of age,gender,income,occupation,educational level.
  3. Look at the competition that exist .Identify those areas that have been overlooked by our competitors.
  4. If business is already existing than identify those products and services which are bought by current customers and the benefits that they are getting from it.
  5. Finally target those customers who actually need your products and services.

5 0
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