Hcip for its restaurant in-house or (2) buy the bread tom a local bakery The chef estimates that variable costs of making each loaf inc on the kitchen equipment and Suppose a Roasted Olive restaurant is considering whother to (1) bake bread $0.50 of ingredients, $0 20 building) based on direct labor assigna $1.06 of foxed overhead 1. What is the absorption cost of making the bread in house? What is the variable cost per loaf? 2. Should Roasted Cive bake the bread in-house or buy from the local bakery? Why? . In addtion to the financial analysis, what es should Roasted Olive consider when making this decision? of variable overhead (electricity to run the oven) and $0.71 of drect labor for kneading and forming the loaves Allocating foxed overhead (depreciation per loaf None of the fxed costs are avoidable. The local bakery would charge Roasted Olive $1.76 per loa What is the absorption cost of making the bread in- house? What s the variable cost per loa? Roasted Olive Decision (Absorption Costing) Vanable cost per loa u(abotion) cost per loa