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CengageNOWv$2$ I Online teaching and learning resource

Make or Buy

A company manufactures various$-$sized plastic bottles for its medicinal product. The manufacturing cost for small bottles is $$30$ per unit $(1,000$ bottles$),$ including fixed costs of $$14$ per unit. A proposal is offered to purchase small bottles from an outside source for $$20$ per unit, plus $$1$ 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

February $18$

$\backslash$table$[[$Line Item Description,Make,Buy,Differential$],[,$Bottles,Bottles,Effects$],[,($Alternative $1),($Alternative $2),($Alternative $2)]]$

Unit costs:

Purchase price

$ $$ $ $$ $ $$

Freight $$

$$

$$

Variable costs $$

$$

$$

Fixed factory overhead $q,$

$q,$

$$

Total unit costs

$ $$

$$