Question

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

A company manufactures various-sized plastic bottles for its medicinal product. The manufacturing cost for small bottles is \$148 per unit (100 bottles), including fixed costs of \$34 per unit. A proposal is offered to purchase small bottles from an outside source for \$99 per unit, plus \$9 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 2aef08007054fe9_1 \$fill in the blank 2aef08007054fe9_2 \$fill in the blank 2aef08007054fe9_3 Unit costs: Purchase price \$fill in the blank 2aef08007054fe9_4 \$fill in the blank 2aef08007054fe9_5 \$fill in the blank 2aef08007054fe9_6 Freight fill in the blank 2aef08007054fe9_7 fill in the blank 2aef08007054fe9_8 fill in the blank 2aef08007054fe9_9 Variable costs fill in the blank 2aef08007054fe9_10 fill in the blank 2aef08007054fe9_11 fill in the blank 2aef08007054fe9_12 Fixed factory overhead fill in the blank 2aef08007054fe9_13 fill in the blank 2aef08007054fe9_14 fill in the blank 2aef08007054fe9_15 Income (Loss) \$fill in the blank 2aef08007054fe9_16 \$fill in the blank 2aef08007054fe9_17 \$fill in the blank 2aef08007054fe9_18

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