Make or Buy
A company manufactures various-sized plastic bottles for its medicinal product. The manufacturing cost for small bottles is $164 per unit (100 bottles), including fixed costs of $30 per unit. A proposal is offered to purchase small bottles from an outside source for $100 per unit, plus $12 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 f78809011fa0fac_1 | $fill in the blank f78809011fa0fac_2 | $fill in the blank f78809011fa0fac_3 |
| Unit costs: | |||
| Purchase price | $fill in the blank f78809011fa0fac_4 | $fill in the blank f78809011fa0fac_5 | $fill in the blank f78809011fa0fac_6 |
| Freight | fill in the blank f78809011fa0fac_7 | fill in the blank f78809011fa0fac_8 | fill in the blank f78809011fa0fac_9 |
| Variable costs | fill in the blank f78809011fa0fac_10 | fill in the blank f78809011fa0fac_11 | fill in the blank f78809011fa0fac_12 |
| Fixed factory overhead | fill in the blank f78809011fa0fac_13 | fill in the blank f78809011fa0fac_14 | fill in the blank f78809011fa0fac_15 |
| Income (Loss) | $fill in the blank f78809011fa0fac_16 | $fill in the blank f78809011fa0fac_17 | $fill in the blank f78809011fa0fac_18 |
b. Determine whether the company should make (Alternative 1) or buy (Alternative 2) the bottles.
Make or Buy
A company manufactures various-sized plastic bottles for its medicinal product. The manufacturing cost for small bottles is $168 per unit (100 bottles), including fixed costs of $31 per unit. A proposal is offered to purchase small bottles from an outside source for $98 per unit, plus $7 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 8f0d72002061fde_1 | $fill in the blank 8f0d72002061fde_2 | $fill in the blank 8f0d72002061fde_3 |
| Unit costs: | |||
| Purchase price | $fill in the blank 8f0d72002061fde_4 | $fill in the blank 8f0d72002061fde_5 | $fill in the blank 8f0d72002061fde_6 |
| Freight | fill in the blank 8f0d72002061fde_7 | fill in the blank 8f0d72002061fde_8 | fill in the blank 8f0d72002061fde_9 |
| Variable costs | fill in the blank 8f0d72002061fde_10 | fill in the blank 8f0d72002061fde_11 | fill in the blank 8f0d72002061fde_12 |
| Fixed factory overhead | fill in the blank 8f0d72002061fde_13 | fill in the blank 8f0d72002061fde_14 | fill in the blank 8f0d72002061fde_15 |
| Income (Loss) | $fill in the blank 8f0d72002061fde_16 | $fill in the blank 8f0d72002061fde_17 | $fill in the blank 8f0d72002061fde_18 |
b. Determine whether the company should make (Alternative 1) or buy (Alternative 2) the bottles.
Make or Buy
A company manufactures various-sized plastic bottles for its medicinal product. The manufacturing cost for small bottles is $140 per unit (100 bottles), including fixed costs of $30 per unit. A proposal is offered to purchase small bottles from an outside source for $96 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 7f88cdf82f9e007_1 | $fill in the blank 7f88cdf82f9e007_2 | $fill in the blank 7f88cdf82f9e007_3 |
| Unit costs: | |||
| Purchase price | $fill in the blank 7f88cdf82f9e007_4 | $fill in the blank 7f88cdf82f9e007_5 | $fill in the blank 7f88cdf82f9e007_6 |
| Freight | fill in the blank 7f88cdf82f9e007_7 | fill in the blank 7f88cdf82f9e007_8 | fill in the blank 7f88cdf82f9e007_9 |
| Variable costs | fill in the blank 7f88cdf82f9e007_10 | fill in the blank 7f88cdf82f9e007_11 | fill in the blank 7f88cdf82f9e007_12 |
| Fixed factory overhead | fill in the blank 7f88cdf82f9e007_13 | fill in the blank 7f88cdf82f9e007_14 | fill in the blank 7f88cdf82f9e007_15 |
| Income (Loss) | $fill in the blank 7f88cdf82f9e007_16 | $fill in the blank 7f88cdf82f9e007_17 | $fill in the blank 7f88cdf82f9e007_18 |
b. Determine whether the company should make (Alternative 1) or buy (Alternative 2) the bottles.
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