Grey Inc. has been purchasing a component, Z for $85 a unit. The company is currently operating at 75% of full capacity, and no significant increase in production is anticipated in the near future. The cost of manufacturing a unit of Z, determined by absorption costing method, is estimated as follows:

Week 3 Quiz Calculator Grey Inc. has been purchasing a component, Z for $85 a unit. The company is currently operating at 75% of full capacity, and no significant increase in production is anticipated in the near future. The cost of manufacturing a unit of Z, determined by absorption costing method, is estimated as follows: Direct materials $30 Direct labor 15 Variable factory overhead 26 Fixed factory overhead 10 Total $81 Prepare a differential analysis report, dated March 12 of the current year, on the decision to make or buy Part Z. Grey Inc. Proposal to Manufacture Part Z March 12, 20XX Purchase price of Part Z v X Differential cost to manufacture Z: Direct materials v X Direct labor v X Variable factory overhead v X X Cost savings from manufacturing Part Z v X Check My Work Previous Next