Make or Buy

A company manufactures various$-$sized plastic bottles for its medicinal product. The manufacturing cost for small bottles is $$144$ per unit $(100$ bottles$),$ including fixed costs of $$37$ per unit. A proposal is offered to purchase small bottles from an outside source for $$99$ per unit, plus $$7$ 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:

b$.$ Determine whether the company should make $($Alternative $1)$ or buy $($Alternative $2)$ the bottles.