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 Freight Variable costs Fixed factory overhead Total unit costs 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 $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 Freight Variable costs Fixed factory overhead Total unit costs Determine whether the company should make (Alternative 1) or buy (Alternative 2) the bottles.
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter11: Differential Analysis And Product Pricing
Section: Chapter Questions
Problem 3BE: Make or buy A company manufactures various-sized plastic bottles for its medicinal product. The...
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Make or Buy
A company manufactures various sized plastic bottles for its medicinal product. The
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 | |||
| Freight | |||
| Variable costs | |||
| Fixed factory overhead | |||
| Total unit costs |
Determine whether the company should make (Alternative 1) or buy (Alternative 2) the bottles.
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