Suppose an Olive Yard restaurant is considering whether to (1) bake bread for its restaurant in house or (2) buy the bread from a local bakery. The chef estimates that variable costs of making each loafindade 50 56 of ingredients 50 25 of variable overhead (electricity to run the oven), and $0.70 of direct labor for kneading and forming the loaves locating foed overhead (depreciation on the kitchen equipment and building, based on direct labor assigns $1.06 of forced overhead per loaf. None of the fored costs are avoidable. The local bakery would charge Oive Yard 51 76 per loaf 1. What is the absorption cost of making the bread in-house? What is the variable cost per la 2. Should Olive Yard bake the bread in-house or buy from the local bakery? Why? 3. ha n to the fnancial analysis, what else should live Yard consider when making this decision? 1. What is the absorption cost of making the bread in-house? What is the variable cost per la Outsourcing Decision (Absorption Costinal Variable cost per loaf Po absorpion cost per al