3.00 1.50 Total Cost Unit Cost Direct materials $25,000 $5.00 Direct labor 15,000 Variable manufacturing overhead 7,500 Variable marketing overhead 12,000 2.40 Fixed plant overhead 30,000 6.00 Total $89,500 $17.90 Fixed overhead will continue whether the ingredient is produced internally or externally. No additional costs of purchasing will be incurred beyond the purchase price. If required, round your answers to the nearest whole number. Required: 1. What are the alternatives for Fresh Foods? 2. List the relevant cost(s) of internal production and of external purchase. 3. Which alternative is more cost effective and by how much? (Use total cost when giving your answer.) 4. Now assume that 20% of the fixed overhead can be avoided if the ingredient is purchased externally. Which alternative is more cost effective and by how much? (Use total cost when giving your answer.) 3.00 1.50 Total Cost Unit Cost Direct materials $25,000 $5.00 Direct labor 15,000 Variable manufacturing overhead 7,500 Variable marketing overhead 12,000 2.40 Fixed plant overhead 30,000 6.00 Total $89,500 $17.90 Fixed overhead will continue whether the ingredient is produced internally or externally. No additional costs of purchasing will be incurred beyond the purchase price. If required, round your answers to the nearest whole number. Required: 1. What are the alternatives for Fresh Foods? 2. List the relevant cost(s) of internal production and of external purchase. 3. Which alternative is more cost effective and by how much? (Use total cost when giving your answer.) 4. Now assume that 20% of the fixed overhead can be avoided if the ingredient is purchased externally. Which alternative is more cost effective and by how much? (Use total cost when giving your answer.)