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Prepare a differential analysis report

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Reference no: EM132109825

Question - Rajiv Company has been purchasing a component, Part Q, for $18.90 a unit. Rajiv 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: EM132109825

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