Name Fresh Foods needs to determine if it would be cheaper to produce 5,000 units of its main food ingredient in-house or to purchase them from a supplier for S12 each. Cost information on internal production includes the following: Total Cost $25,000 15,000 Unit Cost $5.00 3.00 3.70 6.00 Direct materials Direct labor ariable manufacturing overhead 18,50 Fixed plant overhead Total Instructions: 1. Assume that fixed overhead will continue whether the ingredient is produced internally or externally. Which 30,000 588,500 $17.70 alternative is more cost effective and by how much? Now assume that 20% ofthe fixed overhead can be avoided ifthe ingredient is purchased externally which alternative is more cost effective and by how much? 2