Question

In: Accounting

Look at this scenario. You are attempting to make a decision whether to eat out tonight...

Look at this scenario. You are attempting to make a decision whether to eat out tonight or cook. What is the process you go through to make your decision? Use the decision making process as you explain your results. Do not assume it is best to cook. It may not be depending on your meal and how many people you have to feed. Explain in 125 words with a credible resource.

Solutions

Expert Solution

Here we require taking make of buy decision of food. For taking this decision, we should consider following factor before take decision of make or buy

  • The volume of food requires.
  • The fixed cost of making
  • Per-unit direct cost of making
  • Per unit direct cost when buying from outside.

After that we should calculate ‘Cost to Buy’ and ‘Cost to Make. We should select that option which has lower cost between these two.

We should also consider pros and cons of above each alternative, like:-

•             Lack of food making experience

•             Need of small or large volume

•             Food quality concern

•             Lack of good restaurant availability

•             Want to eat a special Varity or category food, which is not possible to make at home.


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