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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...
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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:

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Week 3 Quiz
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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
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