Assume that

RipeTime

reports the following costs to make 17.5 oz. bottles for its Juice Cocktails:

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Ripe Time Company
Cost of Making 17.5-Ounce Bottles
		Total Cost for	Cost per
		1,500,000 Bottles	Bottle
Direct materials	$132,000	$0.088
Direct labor	37,500	0.025
Variable factory overhead	97,500	0.065
Fixed factory overhead	124,500	0.083
Total	$391,500	$0.261

Another manufacturer offers to sell

RipeTime

the bottles for

$0.20.

The capacity now used to make bottles will become idle if the company purchases the bottles. Further, one supervisor with a salary of

$65,000,

a fixed cost, would be eliminated if the bottles were purchased.

Requirement

1. Prepare a schedule that compares the costs to make and buy the 17.5 oz. bottles. Should

RipeTime

make or buy the bottles? (Round the cost per bottle to three decimal places.)

	Make	Buy
	Total	Per Bottle	Total	Per Bottle
Total relevant costs

RipeTime

should

make

buy

the bottles because it costs

less to make then to buy.

less to buy then to make.