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 methods, is estimated as follows:
Direct materials $12.50
Direct labor 5.00
Variable factory overhead 1.25
Fixed factory overhead 3.15
Total $21.90
Prepare a differential analysis report, dated March 12 of the current year, on the decision to make or buy Part Q.