A) Basoom Co. manufactures watches that have intellectual characteristics that contain special chips. Basoom co. has been manufacturing its own chips for the watches. The company is currently operating at 100% of production capacity. Variable manufacturing overhead cost is 60% of direct labour cost. The direct materials and direct labour cost per unit to make the chips are RM2.50 and RM4.00, respectively. Normal production is 50,000 watches per year. Fixed manufacturing overhead currently being charged to the production of the watches is RM25,000. A supplier from Thailand offers to make the chips at a price of RM9.50 per unit. If Basoom Co. accepts the supplier's offer, 10% of fixed manufacturing overhead cost is avoidable. The remaining fixed overhead manufacturing costs will be absorbed by other products. The productive capacity released could be used to produce income of RM40,000 Required: Prepare an incremental analysis to help Basoom Co. make decision whether to buy or continue making the chips. (11 marks)