K Hawley Company makes decorative 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: (Click the icon to view the costs.) Fixed costs are primarily the depreciation on kitchen equipment such as ovens and mixers. Hawleyexpects to retain the equipment. Hawleycan buy the cakes for $23. 11. 12. Should Hawleymake the cakes or buy them? Why? If Hawleydecides to buy the cakes, what are some qualitative factors that Hawleyshould also consider? 11. Should Hawley make the cakes or buy them? Why? (For the Difference column, use a minus sign or parentheses only when the cost of outsourcing exceeds the cost of making the cakes in-house.) Cake costs Variable costs: Difference Make cakes Outsource cakes (make-outsource) Direct materials 575 Direct labor 825 Variable manufacturing overhead 125 Purchase cost 1525 Total differential cost of cakes Hawley should 575 825 125 continue to make the cakes. Outsourcing will decrease profits by $775. 12. If Hawley decides to buy the cakes, what are some qualitative factors that Hawley should also consider? A. Qualitative factors include quality and on-time delivery. OB. Qualitative factors include separating fixed and variable costs. OC. Qualitative factors include contribution margins of the various products produced. OD. Qualitative factors include considering sunk costs and manager's opinions.