1. Natural beauty is a make-up product line; however, they decided

to include a new hair product called "24 shine". this leave-on product will be sold by the box to the market at P8/each. BEcause of available capacity, no additional fixed charges will shouldered by the company, but an additional P100,000 will be absorbed by the product to allocate a charge of the company's present fixed costs to the new product.

using the estimated sales and production of 100,00 boxes of "24 shine" as the standard volume, the accounting department has identified the following costs per box:

direct materials 3.00

direct labor 2.00

total overhead 1.5

total 6.50

natural beauty has also approached a hair care manufacturer to discuss the possibility of buying the bottle containers for the hair leave-on product instead. the purchase price of bottles would be P0.90 per box. I natural beauty accepts the purchase proposal, it is estimated that the direct labor and overhead costs would be reduced by 10% and direct material costs would be reduced by 20%.

Should natural Beauty make or buy the bottle containers? show calculations to support your answer.