With prices unpredictably increasing we were considering using an outsourcer for our bakery production, thus considering buying in our baked goods over making them inhouse with the raw ingredients. Could you briefly explain the implications of calculation in appendix B: a. what the financials recommend, b. why some costs are still included in the option to buy in (highlighted), c. and give one specific advantage and disadvantage again ensuring they explicitly refer to our type of business.

To Make in House Raw materials 40,000 Labour 20,000 Variable overheads 15,000 Fixed overheads 10,000 Total 85,000

To buy from Outsourcer Outsourcer price 70,000 Labour (Finishing) 10,000 Fixed overheads 10,000 Total 90,000