Question

The Riverbed Company manufactures 1,488 units of a part that could be purchased from an outside supplier for $14 each. Riverbed’s costs to manufacture each part are as follows:

Direct materials $3
Direct labor 3
Variable manufacturing overhead 3
Fixed manufacturing overhead 9
Total $18

All fixed overhead is unavoidable and is allocated based on direct labor. The facilities that are used to manufacture the part have no alternative uses.

What are the alternatives for Fresh Foods?

Answer 1

Make the ingredient in house or buy it externally.

Step-by-step explanation:

There could be two alternatives for fresh foods that are shown below

1. Make the ingredient in the house: It means the company should make the ingredient in its factory so that it saves the purchase cost that i.e purchased from another buyer

OR

2. The second alternative is to buy it externally i.e rather making in the house the company prefer to buy externally so that it can focus on other things i.e going in the organization