Suppose Roasted Peanuts 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 $$0\mathrm{.}58$ of ingredients, $$0\mathrm{.}19$ of variable overhead $($electricity to run the oven$),$ and $$0\mathrm{.}70$ of direct labor for kneading and forming the loaves. Allocating fixed overhead $($depreciation on the kitchen equipment and building$)$ based on direct labor, Roasted Peanuts assigns $$1\mathrm{.}06$ of fixed overhead per loaf. None of the fixed costs are avoidable. The local bakery would charge $$1\mathrm{.}74$ per loaf.

Read the requirements.

Requirements $1.$ What is the unit cost of making the bread in$-$house?

Complete the following outsourcing decision analysis to determine Roasted Peanuts's unit cost of making the bread.

Roasted Peanuts

$\backslash$table$[[$Outsourcing Decision$],[$Direct material,$],[$Direct labor,$],[$Variable overhead,$],[,$ Variable cost per unit,$],[$Plus: Fixed overhead per unit,$],[$Cost per unit,$]]$

Requirem$$nts

What is the full product unit cost of making the bread in$-$house?

Should Roasted Peanuts bake the bread in$-$house or buy from the local bakery? Why?

In addition to the financial analysis, what else should Roasted Peanuts consider when making this decision?

Requirement $2.$ Should Roasted Peanuts bake the bread in$-$house or buy from the local bakery? Why?

Decision: $$ since the $$ of making each loaf is $$ the cost of outsourcing each loaf.

Requirement $3.$ In addition to the financial analysis, what else should Roasted Peanuts consider when making this decision?

Roasted Peanuts should consider the following qualitative factors before making a final decision:

A$.$ How does the quality and freshness of the local bakery bread compare to Roasted Peanuts bread?

$$ B$.$ Will the local bakery meet their delivery time requirements?