1. Mamma’s Marvelous Meltaways makes seasonal cookies which it sells online. Mamma’s bestselling cookie is the Scrumptious Snowball, an almond cookie dusted with confectioner’s sugar, topped with “holiday colors” sprinkles, and packaged in a reusable holiday “tin.” (The tin is the unit.) The unit cost to produce and package the product is $7.00/tin, as follows: Direct materials: $2.50 Direct labor: $2.00 Fixed overhead: $1.50 Variable overhead: $1.00 Total unit cost $7.00 Mamma’s plan is to produce 200,000 tins in November. As in past years, Mamma’s expects to sell out all units in December at $25.00/tin. BigTime Bakers has contacted Mamma’s and offered to make 200,000 units for a total price of $1,250,000 ($6.25/tin). By purchasing from BigTime, Mamma’s would save $1.00/unit in fixed costs for interest, insurance, and utilities. Required: You are a Managerial Accounting consultant hired to advise Mamma’s management. Answer whether Mamma’s should produce the product itself or purchase externally, and cover all three of the following topics: What is the decision (if made) to purchase externally called (i.e., what is the technical term for such a decision)? (One-word answer is okay). 
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3. What is the quantitative analysis of the decision? (Show your work! All calculations should be presented so partial credit can be awarded if there are merely mathematical mistakes.) 
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5. Discuss the qualitative aspects of the decision. (One perfect paragraph in full sentences and with good grammar – just as you would explain orally to management when you meet with them!)

Answer rating: 100% (QA)

The decision to purchase externally is called outsourcing The quantitative analysis of the decision ... View the full answer