Suppose Pasta 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 loaf include 50.58 of ingredients, $0.24 of variable overhead (electricity to run the oven), and $0.77 of direct labor for kneading and forming the loaves. Allocating fixed overhead (depreciation on the kitchen equipment and building) based on direct labor, Pasta assigns $0.99 of fixed overhead per loaf. None of the fixed costs are avoidable. The local bakery would charge $1.78 per loaf. Read the requirements. Requirements 1. What the unit cost of making the bread in-house? Complete the following outsourcing decision analysis to determine Pasta's unit cost of making the bread. Pasta Outsourcing Decision Direct material Requirements Direct labor Variable overhead Variable cost per unit 1. What is the full product unit cost of making the bread in-house? 2. Should Pasta bake the bread in-house or buy from the local bakery? Why? 3. In addition to the financial analysis, what else should Pasta consider when making this decision? Plus: Fixed overhead per unit Cost per unit Print Done