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Make or Buy

A company manufactures various$-$sized plastic bottles for its medicinal product. The manufacturing cost for small bottles is $$57$ per unit $(100$ bottles$),$ including fixed costs of $$13$ per unit. A proposal is offered to purchase small bottles from an outside source for $$32$ per unit, plus $$4$ per unit for freight.

This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.

Open spreadsheet

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 $"0".$ Enter unit costs as positive values. Use a minus sign to indicate negative Differential Effects.

Make or Buy

The following data is provided for a company, that manufactures various$-$sized plastic bottles for its medicinal product:

DATA

Manufacturing cost $$57$

Including fixed costs $$13$

Purchase price $$32$

Freight $$4$

REQUIRED:

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.

"Using formulas and cell references from the problem data, perform the required analysis.

Formulas entered in the green cells show in the orange cells. Transfer amounts to CNOWv$2$

for grading."

Differential Analysis

Make Bottles $($Alt$.1)$ or Buy Bottles $($Alt$.2)$

February $18$

Make Bottles $($Alternative $1)$ Buy Bottles $($Alternative $2)$ Differential Effects $($Alternative $2)$

Unit costs:

Purchase price

Freight

Variable costs

Fixed factory overhead

Total unit costs