The total cost of Baking pies inhouse would be =
number of pies required X cost per pie + Fixed cost= 25 X 1 + 80= $105
The total cost of purchasing pies from large regional bakery =
Number of pies required X cost of purchasing one pie = 25 X 3 = $75.
Thus, choosing the second alternative is best as it saves the financial resources of the company.
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