Snipe Company has been purchasing a component, Part Q for $19.20 per 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 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

Required:

Prepare a differential analysis report, dated March 12 of the current year, on the decision to make or buy Part Q. Refer to the Amount Descriptions for the exact wording of the answer choices for text entries. Use a minus sign to indicate numbers to be subtracted or negative numbers . If there is no amount or an amount is zero, enter "0". Below the report, indicate whether Snipe Company should make or buy Part Q.

Prepare a differential analysis report, dated March 12 of the current year, on the decision to make or buy Part Q. Refer to the Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Use a minus sign to indicate numbers to be subtracted or negative numbers . If there is no amount or an amount is zero, enter "0". Below the report, indicate whether Snipe Company should make or buy Part Q.

Differential Analysis

Proposal to Manufacture Part Q

March 12

1		Make Part Q (Alternative 1)	Buy Part Q (Alternative 2)	Differential Effect on Income (Alternative 2)
2	Unit costs:
3
4
5
6
7
8	Income (loss)

2. Snipe Company should

a. make Part Q

b. buy Part Q