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Question (Category: accounting homework)
mel039s meals 2 go purchases cookies that it includes in the 10,000 box lunches it prepares and sells annually. mel039s kitchen and the adjoining meeting room operate at 70 percent of capacity. mel039s purchases the cookies for $0.60 each, but is considering making them instead. mel039s 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 includes an allocation of $0.30 per cookie for fixed overhead. however, total fixed overhead for the company would not increase if mel039s makes the cookies.br mel himself has come to you for advice. ampquotit would cost me $0.80 to make the cookies, but only $0.60 to buy. should i continue buying them?ampquot materials and labor are variable costs, but variable overhead would be only $0.15 per cookie. two cookies are put into every lunch.br br how would you advise mel? prepare a schedule to show the differential costs. div


Answer by Matt D. (Purchased 3 times and rated )