Question
A company manufactures various-sized plastic bottles for its medicinal product. The manufacturing cost for small bottles is $168 per unit (100 bottles), including fixed
A company manufactures various-sized plastic bottles for its medicinal product. The manufacturing cost for small bottles is $168 per unit (100 bottles), including fixed costs of 530 per unit. A proposal is offered to purchase small bottles from an outside source for $104 per unit, plus $8 per unit for freight. a. Prepare a differential analysis dated February 18 to determine whether the company should make (Alternative 1) or buy (Alternative 2) the bottles, assuming fixed costs are unaffected by the decision. If an amount is zero, enter "0" Differential Analysis Make (Alt. 1) or Buy (Alt. 2) Bottles Line Item Description Unit costs Purchase price Freight Vanable costs Fixed factory overhead Total unit costs February 18 Make Bottles Buy Bottles Differential Effects: (Alternative 1) (Alternative 2) (Alternative 2) b. Determine whether the company should make (Alternative 1) or buy (Alternative 2) the bottles.
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