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Gibson Company makes wedding cakes. The company is considering buying the cakes rather than baking them, which will allow it to concentrate on decorating. The
Gibson Company makes wedding cakes. The company is considering buying the cakes rather than baking them, which will allow it to concentrate on decorating. The company averages 100 wedding cakes per year and incurs the following costs from baking wedding cakes: Fixed costs are primarily the depreciation on kitchen equipment such as ovens and mixers. Gibson expects to retain the equipment. Gibson can buy the cakes for $25. Should Gibson make the cakes or buy them? Why? If Gibson decides to buy the cakes, what are some qualitative factors that Gibson should also consider? Should Gibson make the cakes or buy them? Why? If Gibson decides to buy the cakes, what are some qualitative factors that Gibson should also consider? A. Qualitative factors include considering sunk costs and manager's opinions. B. Qualitative factors include separating fixed and variable costs. C. Qualitative factors include contribution margins of the various products produced. D. Qualitative factors include quality and on-time delivery
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