Differential Analysis

A restaurant bakes its own bread for a cost of $165 per unit (100 loaves), including fixed costs of $43 per unit. A proposal is offered to purchase bread from an outside source for $110 per unit, plus $15 per unit for delivery.

Differential Analysis Make Bread (Alternative 1) or Buy Bread (Alternative 2) August 16

Make Bread Buy Bread Differential Effect on Income 2

(Alternative 1) (Alternative 2) (Alternative 2)

Purchase price ___________ _____________ ____________

Delivery price ____________ ____________ ____________

Variable cost ____________ _______________ _______________

Fixed factory overhead ____________ _____________ _______________

Income (loss) ____________ _______________ ________________