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Pnok company has been purchasing a component part q for

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Pnok Company has been purchasing a component, Part Q, for $18.90 a unit. Pnok is currently operating at 70% of capacity and no significant increase in production is anticipated in the near future. The cost of manufacturing a unit of Part Q, determined by absorption costing methods, is estimated as follows:

  • Direct materials $11.25
  • Direct labor 4.50
  • Variable factory overhead 1.12
  • Fixed factory overhead 3.15
  • Total $20.02

Prepare a differential analysis report, dated March 12 of the current year, on the decision to make or buy Part Q.

Reference no: EM13600646

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