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FORMATION FOR DECISION MAKING WITH A FOCUS ON OPEN 6-33 Make or Buy at Nantucket Nectars Assume that Nantucket Nectars reports the following costs to make 17.5 oz. bottles for its juice cocktails: Nantucket Nectars Company Cost of Making 17.5-Ounce Bottles Total Cost for 1,000,000 Bottles Cost per Bottle $ 80,000 Direct materials $.080 Direct labor 30,000 030 Variable factory overhead 60,000 060 Fixed factory overhead 85,000 ,085 $255,000 $.255 Total costs Another manufacturer offers to sell Nantucket Nectars the bottles for $.25. The capacity now used to make bottles will become idle if the company purchases the bottles. Further, one supervisor with a salary of $60,000, a fixed cost, would be eliminated if the bottles were purchased. Prepare a schedule that compares the costs to make and buy the 17.5 oz. bottles. Should Nantucket Nectars make or buy the bottles? 6-34 Make or Buy and the Use of Idle Facilities at Nantucket Nectars Refer to the preceding exercise. Suppose Nantucket Nectars can use the released facilities in another manufacturing activity that makes a contribution to profits of $75,000 or can rent them out for $55,000. Prepare a schedule that compares the four alternative courses of action. Which alternative would yield the lowest net cost