Homework: Ch. 8 Homework Question 9, S8-11 (similar to) Part 1 of 3 HW Score: 59.3%, 5.93 of 10 points O Points: 0 of 1 Save Suppose an Olive Yard restaurant is considering whether to (1) bake bread for its restaurant in-house or (2) buy the bread from a local bakery. The chef estimates that variable costs of making each loaf include $0.52 of ingredients, $0.20 of variable overhead (electricity to nun the oven), and $0.77 of direct labor for kneading and forming the loaves. Allocating fixed overhead (depreciation on the kitchen equipment and building) based on direct labor assigns $0.96 of fixed overhead per loaf. None of the fixed costs are avoidable. The local bakery would charge Olive Yard $1.74 per loaf 1. What is the absorption cost of making the bread in-house? What is the variable cost per loof? 2. Should Olive Yard bake the bread in-house or buy from the local bakery? Why? 3. In addition to the financial analysis, what else should Olive Yard consider when making this decision? % 1. What is the absorption cost of making the bread in-house? What is the variable cost per loaf? Olive Yard Outsourcing Decision (Absorption Costing) Variable cost per loaf % Full (absorption) cost per loaf %