Mel's Meals 2 go purchase cookies that include in the 10,000 box lunches it prepares and sells annually. Mel's kitchen and adjoining meeting room operate 70 present of capacity. Mel's purchase the cokies for 66 cents each but is conaiderung making then instead. Mel's can bake each cookie for 20 cents for materials. 18 cent for direct labor, and 63 cents for overhead without increasing its capacity. The 63 cents for overhead includes an allocation of 39 cents oer cookie for fixed overhead. However, total fixed overhead for the company would not uncrease uf Mel's makes the cookies.

Mel's Meals 2 Go purchases cookles that it includes in the 10.000 box lunches it prepares and sells annually. Melss kitchen and adjoining meeting room operate at 70 percent of capacity. Mels purchases the cookies for $0.66 each but is considering making them instead. Mel's can bake each cookie for $0.20 for materials, $0.18 for direct labor, and $0.63 for overhead without increasing its capacity. The $0.63 for overhead includes an allocation of $0.39 per cookle for fixed overhead. However, total fixed overhead for the company would not increase if Mels makes the cookies. Mel himself has come to you for advice. "It would cost me $1.01 to make the cookles, but only $0.66 to buy. Should I continue buying them?" Materials and labor are variable costs, but variable overhead would be only $0.24 per cookie. Two cookles are put into every lunch. Required: a. Prepare a schedule to show the differential costs per cookle. (Enter your answers to 2 decimal places. Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.) b. Should Mel continue to buy the cookles? Yes No