Hart Computer Company has been purchasing carrying cases for its portable computers at a delivered cost of $68 per unit. The company, which is currently operating below full capacity, charges factory overhead to production at the rate of 35% of direct labor cost. The fully absorbed unit costs to produce comparable carrying cases are expected to be:
Direct materials ........... $25.00
Direct labor ............ 32.00
Factory overhead (35% of direct labor) . 11.20
Total cost per unit .......... $68.20

If Hart Computer Company manufactures the carrying cases, fixed factory overhead costs will not increase and variable factory overhead costs associated with the cases are expected to be 25% of the direct labor costs.
a. Prepare a differential analysis report, dated June 5, 2008, for the make-or-buy decision.
b. On the basis of the data presented, would it be advisable to make the carrying cases or to continue buying them? Explain.