include $$0\mathrm{.}54$ of ingredients, $$0\mathrm{.}24$ of variable overhead $($electricity to run the oven$),$ and $$0\mathrm{.}75$ of direct labor for kneading and forming the loaves. Allocating fixed overhead $($depreciation on the kitchen

equipment and building$)$ based on direct labor, Seafood House assigns $$0\mathrm{.}95$ of fixed overhead per loaf. None of the fixed costs are avoidable. The local bakery would charge $$1\mathrm{.}80$ per loaf.

Read the requirements.

Requirements $1.$ What is the unit cost of making the bread in$-$house?

Complete the following outsourcing decision analysis to determine Seafood House's unit cost of making the bread.

Seafood House

Outsourcing Decision

Direct material

Direct labor

Variable overhead

Variable cost per unit

Plus: Fixed overhead per unit

Cost per unit

Requirements

What is the full product unit cost of making the bread in$-$house?

Should Seafood House bake the bread in$-$house or buy from the local bakery?

Why?

In addition to the financial analysis, what else should Seafood House consider

when making this decision?

Requirement $2.$ Should Seafood House bake the bread in$-$house or buy from the local bakery? Why?

Decision:

since the

of making each loaf is

the cost of outsourcing each loaf.

Requirement $3.$ In addition to the financial analysis, what else should Seafood House consider when making this decision?

Seafood House should consider the following qualitative factors before making a final decision:

A$.$ Will the local bakery meet their delivery time requirements?