A company manufactures various-sized plastic bottles for its medicinal product. The manufacturing cost for small bottles is $144 per unit (100 bottles), including fixed costs of $32 per unit. A proposal is offered to purchase small bottles from an outside source for $103 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.