Make or Buy

A company manufactures various$-$sized plastic bottles for its medicinal product. The manufacturing cost for small bottles is $$30$ per unit bottles$),$ including fixed costs of $$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 $18$

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Check My Work

For the make and buy alternatives provide the unit costs. Determine the differential effect of the costs by subtracting alternative $1$ from alternative $2.$

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

Make the bottles $$