Questions -
1. Jamison Company produces and sells Product X at a total cost of $25 per unit, of which $15 is product cost and $10 is selling and administrative expenses. In addition, the total cost of $25 is made up of $14 variable cost and $11 fixed cost. The desired profit is $5 per unit. Determine the markup percentage on total cost.
2. Snipe Company has been purchasing a component, Part Q, for $19.20 a unit. Snipe 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 the absorption costing method, is estimated as follows:
Direct materials $11.50
Direct labor 4.50
Variable factory overhead 1.12
Fixed factory overhead 3.15
Total $20.27
Prepare a differential analysis report, dated March 12 of the current year, on the decision to make or buy Part Q.