Auntie Es reports the following costs to make 17.5 oz. Lemonade:

Auntie Es Cost of Making 17.5 Ounce Bottles
	Total Cost for 1,000,000 Bottles	Cost per Bottle
Direct materials	$ 85,000	$.085
Direct labor	30,000	.030
Variable factory overhead	60,000	.060
Fixed factory overhead	85,000	.085
Total costs	$ 260,000	$ .26

Johnson Manufacturing offers to sell Auntie E the bottles for $.25. The capacity now used to make bottles will become idle if the company purchases the bottles and one supervisor with a fixed cost salary of $60,000 would be eliminated if the bottles are purchased. Complete a costs to make vs.buy the 17.5 oz. bottles excel sheet. Should Auntie E make or buy the bottles?

2. If Auntie E can use the released facilities in another manufacturing activity that makes a contribution to profits of $75,000 or can rent out the facilities released for $55,000. Prepare a schedule that compares the four alternative courses of action:

1. Make

2. Buy and leave facilities idle

3. Buy and use facilities for other activities

4. Buy and rent out facilities

Which alternative would yield the lowest net cost?