Quick Company Has Been Purchasing a Component, Part Q, for $20

question 98

Essay

Quick Company has been purchasing a component, Part Q, for $20 a unit. Quick 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 method, is estimated as follows:
$\begin{array}{ll} \$ 12.50 &\text { Direct materials } \\5.00 &\text { Directlabor } \\1.25 &\text { Variable factory overhead } \\\underline{3.15}&\text { Fixed factory overhead } \\\underline{\$21.90}&\text { Total }\end{array}$ Prepare a differential analysis report, dated March 12 of the current year, on the decision to make or buy Part Q.

---

Definitions:

Acute Laryngopharyngitis

An inflammation of the larynx and pharynx, often causing sore throat, cough, and difficulty swallowing.

Correct Code

A reference to using the precise and appropriate code in medical coding to accurately describe a diagnosis, procedure, or service.

Pneumonitis

Inflammation of the lung tissue that can be caused by various factors, including infections, drugs, or exposure to radiation.

Inhalation

The act of breathing in; the intake of air or other substances into the lungs.