A restaurant bakes its own bread for a cost of $160 per unit (100 loaves), including fixed costs of $42 per unit. A proposal is offered to purchase bread from an outside source for $108 per unit, plus $14 per unit for delivery.

Required:

1.

Prepare a differential analysis dated August 16 to determine whether the company should make (Alternative 1) or buy (Alternative 2) the bread, assuming fixed costs are unaffected by the decision. Refer to the list of Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter "0". A colon (:) will automatically appear if required.

2.

Determine whether the company should make (Alternative 1) or buy (Alternative 2) the bread

Differential Analysis

Make Bread (Alternative 1) or Buy Bread (Alternative 2)

August 16

1		Make Bread	Buy Bread	Differential Effect on Income
2		(Alternative 1)	(Alternative 2)	(Alternative 2)
3	Unit costs:
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