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Fresh Foods, a targe restaurant chain, needs to detemmine if it would be chesper to groduce 5,000 units of its main food ingredient for use

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Fresh Foods, a targe restaurant chain, needs to detemmine if it would be chesper to groduce 5,000 units of its main food ingredient for use in its restaurants or to purchas. them from an outside supplier for $12 each. Cost information on intemat production includes the following: Axed overhead will continve whether the ingredsent is produced internally or externally. No addibonal costs of purchasing will be incurred berond the purchase price, If required, round your answers to the nearest whole number. Required: 1. What are the alternatives for fresh foods? Make the ingredient in house or buy it extemaliy 2. List the reievant cost(s) of intemal production and of external burchase. 3. Which altemative is more cost effective and by how much? (Use total cost when aiving your answet) 4. Now assume that 20% of the fised oveihesd can be avoided if the ingredient is purchased externalyy. Which altermative is more cost effective and by how much? (Use Fixed overhesd will continue whether the ingredient is produced internally or externally. No additional costs of porchasing 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? Make the ingredient in house or buy it externally. 2. List the relevant cost(s) of intemal production and of extermal purchase. 3. Which alternative is more cost effective and by how much? (Use total cost when giving your answee.) 4. Now assume that 200 of the fixed overhead can be avoided if the ingredient is purchased extemally. Which attemative is more cast effective and by hew much? (Use total cost when giving your answer.) * crea 4 wat 1. and 2. The ingredient can be proouced internally or purchased externally. 3. Relevant costs are future costs and differ across aternatives. Determine relevant costs for both alternatives. Set up four columns. First columin lists all costs. Socond and third columns are for alternatives, mske or buy and list all ameunts. Fourth column is the differential cost to make

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