Question 7

plies to th Required Information cookies th 112 each 6071 for ov IThe following information applies to the questions displayed below] u for advice 28 per coo Mel's Meals 2 Go purchases cookies that it includes in the 10,000 box lunches it prepares and sells annually. Mel's kitchen and adjoining meeting room operate at 70 percent of capacity. Mel's purchases the cookies for $112 each but is considering making them instead. Mel's can bake each cookie for $0.33 for materials, $o.28 for direct labor, and $0.71 for overhead without increasing its capacity The $0.71 for overhead includes an allocation of $0.43 per cookie for fixed overhead. However, total fixed overhead for the company would not increase if Mel's makes thecookies. Mel himself has come to you for advice. "It would cost me $1.32 to make the cookies, "lowe show the diffe but only $112 to buy. Should I continue buying them?" Materials and labor are variable ect.) costs, but variable overhead would be only $0.28 per cookie. Two cookies are put into every lunch. tus Quo Alt