7. Suppose Fine Cuisine restaurant is considering whether to (1) bake bread for its restaurant in-house or (2) buy the bread from a local bakery. The chef estimates that variable costs of making each loaf include $0.54 of ingredients, $0.24 of variable overhead (electricity to run the oven), and $0.72 of direct labor for kneading and forming the loaves. Allocating fixed overhead (depreciation on the kitchen equipment and building) based on direct labor, Fine Cuisine assigns $1.00 of fixed overhead per loaf. None of the fixed costs are avoidable. The local bakery would charge $1.72 per loaf. Read the requirements! Requirements 1. What is the unit cost of making the bread in-house? Complete the following outsourcing decision analysis to determine Fine Cuisine's unit cost of making the bread. Fine Cuisine Outsourcing Decision Direct material Direct labor Variable overhead Variable cost per unit Plus: Fixed overhead per unit Cost per unit Requirement 2. Should Fine Cuisine bake the bread in-house or buy from the local bakery? Why? Decision: (1) since the (2) of making each loaf is (3) the cost of outsourcing each loaf. Requirement 3. In addition to the financial analysis, what else should Fine Cuisine consider when making this decision? Fine Cuisine should consider the following qualitative factors before making a final decision: O A. How does the quality and freshness of the local bakery bread compare to Fine Cuisine bread? OB. Will the local bakery meet their delivery time requirements? OC. Both A and B OD. None of the above