Fresh Foods, a large restaurant chalin, needs to determine if it would be cheaper to produce 5,000 units of its main food Ingredient for use in its restaurants or to purchase them from an outside supplier for $12 each. Cost Information an internal production includes the following: Total Cost Unit Cost $25,000 $5.00 15,000 3.00 Direct materials Direct labor Variable manufacturing overhead Variable marketing overhead Fixed plant overhead 7,500 1.50 2.20 11,000 30,000 6.00 Total $88,500 $17.70 Fixed overhead will continue whether the ingredient is produced internally or extemally. No additional costs of purchasing will be incurred beyond the purchase price. If required, round your answers to the nearest whole number, Requiredt 1. What are the alternatives for Fresh Foods? Buy the ingredient externally and sell it in house 2. List the relevant cost(s) or internal production and of external purchase. 3. Which alternative is more cost effective and by how much? (Use total cost when giving your answer.) Buy 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.) Next > Check My Works mor Check My Work unes remaining