A. Corona Enterprise (CE) produces a variety of herbs from processing 1 ton of Krypton, a rare mineral. Material and processing costs total RM60,000 per ton, where 1/4 of its are allocated to product C19. About 7,000 units of product C19 are produced from each ton of Krypton. The units can either be sold at the split-off point for RM9.00 each, or processed further at a total cost of RM9,500 and then be sold RM12.00 each. On the other hand, CE also processes the other 3/4 of ton of krypton to produce herbs for use in cosmetic products. However, there is an outside supplier has offered to sell the herb to CE at a price of RM35 per unit. CE is currently producing the herb at 15,000 units. To evaluate this offer, CE has gathered the following cost information as if the herb is produced internally. Direct materials (Krypton) Direct labour Variable manufacturing overhead Fixed manufacturing overhead, traceable Fixed manufacturing overhead, allocated Total cost RM/unit herb 14 10 3 6* RM/15,000 unit herbs 210,000 150,000 45,000 90,000 135,000 630,000 9 42 *1/3 supervisory salaries; 2/3 depreciation of special equipment (no resale value) REQUIRED: (a) Discuss whether product C19 should be processed further or sold at the split-off point. Show all computations. (3 Marks) (b) Assuming that the company has no alternative use for the facilities that are now being used to produce the herbs, explain whether the outside supplier's offer should be accepted or not. Show all computations. (4 Marks) (c) Suppose that if the herbs were purchased, CE could use the freed capacity to launch a new product that could generate a segment margin of RM150,000 per year. Calculate whether CE should accept the offer to buy the herbs for RM35 per unit or not. Show all computations. (4 Marks)