Make or Buy

A company manufactures various-sized plastic bottles for its medicinal product. The manufacturing cost for small bottles is $152 per unit (100 bottles), including fixed costs of $30 per unit. A proposal is offered to purchase small bottles from an outside source for $98 per unit, plus $11 per unit for freight.

a. Prepare a 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	$fill in the blank 2de1e8fe3063021_1	$fill in the blank 2de1e8fe3063021_2	$fill in the blank 2de1e8fe3063021_3
Unit costs:
Purchase price	$fill in the blank 2de1e8fe3063021_4	$fill in the blank 2de1e8fe3063021_5	$fill in the blank 2de1e8fe3063021_6
Freight	fill in the blank 2de1e8fe3063021_7	fill in the blank 2de1e8fe3063021_8	fill in the blank 2de1e8fe3063021_9
Variable costs	fill in the blank 2de1e8fe3063021_10	fill in the blank 2de1e8fe3063021_11	fill in the blank 2de1e8fe3063021_12
Fixed factory overhead	fill in the blank 2de1e8fe3063021_13	fill in the blank 2de1e8fe3063021_14	fill in the blank 2de1e8fe3063021_15
Income (Loss)	$fill in the blank 2de1e8fe3063021_16	$fill in the blank 2de1e8fe3063021_17	$fill in the blank 2de1e8fe3063021_18

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