Should cummings make or buy the bottles

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Cummings Company has been purchasing 10,000 bottles every year for its product at a cost of $40 per bottle. The cost to produce comparable bottles is expected to be $24 for direct material and $10 for direct labour. If Cummings makes the bottles, fixed overhead cost will not increase and variable factory overhead costs associated with the cases are expected to be 20% of direct materials costs. The factory space that would be used to manufacture the bottles is currently used for storage. If Cummings makes the bottles the company would need to rent offsite warehouse space for $30,000 per year.

Question 1: Should Cummings make or buy the bottles?

Reference no: EM132552903

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