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Question: Make-or-Buy Decision and Qualitative Factors. Soda Bottling, Inc., currently bottles its own soda drinks. Management is interested in outsourcing the production of bottles to a reputable manufacturing company that can supply the bottles for $0.04 each. Soda Bottling incurs the following monthly production costs to produce 1,000,000 bottles internally.
If production is outsourced, all variable production costs and 70 percent of fixed production costs will be eliminated.
Perform differential analysis using the format presented "Make-or-Buy Differential Analysis for Best Boards, Inc.". Assume making the product internally is Alternative 1, and buying the product from an outside manufacturer is Alternative 2.Which alternative is best? Explain.
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