Example: Make vs Buy: A decision concerning whether an item should be produced internally or purchased from an outside supplier. Java J's is a coffee shop offering a variety of coffees, teas and smoothies. The shop also bakes and sells pastry items in a small kitchen located in the shop. The owner (Jay) has been approached by a local individual who has offered to prepare these baked goods and deliver them daily to the shop. The individual is offering to provide the baked goods at a cost of $ 3.50 per unit. Should Java J's outsource the supply of these baked goods? Jay summarized the current costs of preparing the items below: Cost per unit Variable costs: Direct material $ 1.60 Direct labor 0.80 Other variable costs 0.50 Fixed costs: Fixed Costs 0.50 General and admin 1.00 Total cost per unit $ 4.40 Should Java J's outsource its baked-goods. Recommendation: Savings from Outsourcing