1. Make or Buy

   A company manufactures various-sized plastic bottles for its medicinal product. The manufacturing cost for small bottles is $160 per unit (100 bottles), including fixed costs of $31 per unit. A proposal is offered to purchase small bottles from an outside source for $102 per unit, plus $9 per unit for freight.

   a. Prepare a The area of accounting concerned with the effect of alternative courses of action on revenues and costs.differential analysis dated July 31 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". Use a minus sign to indicate a loss.

   Differential Analysis
   Make Bottles (Alt. 1) or Buy Bottles (Alt. 2)
   July 31
   	Make Bottles (Alternative 1)	Buy Bottles (Alternative 2)	Differential Effect on Income (Alternative 2)
   Sales price	$	$	$
   Unit costs:
   Purchase price	$	$	$
   Freight
   Variable costs
   Fixed factory overhead
   Income (Loss)	$	$	$

   Feedback

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

   • Make the bottles
   • Buy the bottles

   Feedback

   Feedback

Loading item

There was an error loading this item. If this continues to occur, please contact Technical Support.

Check My Work2 more Check My Work uses remaining.

• Previous
• Next

• 100% Correct
• Partially Correct
• Incorrect
• Needs Instructor Grading

Basic Calculatorclose

0

UseEntBSBSpCEHomCEnd

789+

456-

123*

0.=/