1. The Jonestown Hideaway Resort hosts hundreds of weddings each year in its sprawling event center. In order to offer wedding parties an all-inclusive experience, they currently have a dedicated wedding cake bakery which produces an average of 1,000 wedding cakes per year. Data concerning the unit production costs of their standard wedding cake is as follows:

Direct Materials	$63
Direct Labor	$45
Variable Production Overhead	$22
Variable Selling/Administrative	$12
Fixed Production Overhead	$118
Fixed Selling/Administrative	$27
Total Production Cost (per unit)	$287

An outside bakery has offered to sell the Jonestown Hideaway Resort all of the wedding cakes it needs at a cost of $216 each. If the resort decides to shut down their wedding cake bakery, they can eliminate 20% of their fixed production overhead. Additionally, they can generate $15,000 by selling off some of the fully depreciated equipment (this does not have any additional effect on fixed production overhead).

Required:

1. What effect would switching to an outside bakery have on the operating income of the resort?
2. Should the resort make their own wedding cakes or buy them from the outside baker?
3. Aside from the financial information provided, identify two additional considerations which the resort should weigh while making their decision.