Make or Buy

A company manufactures various$-$sized plastic bottles for its medicinal product. The manufacturing cost for

small bottles is $$75$ per unit $(100$ bottles$),$ including fixed costs of $$28$ per unit. A proposal is offered to

purchase small bottles from an outside source for $$40$ per unit, plus $$4$ per unit for freight.

a$.$ Prepare a differential analysis dated July $31$ to determine whether the company should make $($Alternative

or buy $($Alternative $2)$ the bottles, assuming fixed costs are unaffected by the decision. If an amount is

zero, enter $"0".$ Use a minus sign to indicate a loss.

Differential Analysis

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

July $31$

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