Make or Buy

A company manufactures various sized plastic bottles for its medicinal product. The manufacturing cost for small bottles is $56 per unit (100 bottles), including fixed costs of $18 per unit. A proposal is offered to purchase small bottles from an outside source for $29 per unit, plus $4 per unit for freight.

Prepare a differential analysis dated March 30 to determine whether the company should Make Bottles (Alternative 1) or Buy Bottles (Alternative 2), assuming that fixed costs are unaffected by the decision. If an amount is zero, enter "0". For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Differential Analysis
Make Bottles (Alt. 1) or Buy Bottles (Alt. 2)
March 30
	Make Bottles (Alternative 1)	Buy Bottles (Alternative 2)	Differential Effect (Alternative 2)
Unit Costs:
Purchase price	$fill in the blank 66877d04bf8ef85_1	$fill in the blank 66877d04bf8ef85_2	$fill in the blank 66877d04bf8ef85_3
Freight	fill in the blank 66877d04bf8ef85_4	fill in the blank 66877d04bf8ef85_5	fill in the blank 66877d04bf8ef85_6
Variable costs	fill in the blank 66877d04bf8ef85_7	fill in the blank 66877d04bf8ef85_8	fill in the blank 66877d04bf8ef85_9
Fixed factory overhead	fill in the blank 66877d04bf8ef85_10	fill in the blank 66877d04bf8ef85_11	fill in the blank 66877d04bf8ef85_12
Total unit costs	$fill in the blank 66877d04bf8ef85_13	$fill in the blank 66877d04bf8ef85_14	$fill in the blank 66877d04bf8ef85_15

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