a. Since the profit of the Chocolate Finger is higher than the Shortbread and in order toensure that the company is able to meet the full quantity demanded for ChocolateFinger from the customers, Sales Manager of Aneka Sedap Sdn Bhd has suggestedbuying all the Shortbread from an outside supplier who has agreed to supply them at RM28 per container including carriage. The resources previously used for Shortbreadproduction would then be used to produce the Chocolate Fingers. Evaluate whether thesuggestion of the Sales Manager will improve the company's profitability in June. (Showthe revised profit of the company if Shortbread is outsourced). b. With respect to the situation in item (c) above, suggest two (2) qualitative factors thatshould be considered by the management if the company purchases from an outsidesupplier.

Aneka Sedap Sdn Bhd manufactures four types of cookies which are packed in special tin containers with the company popular brand name. The following table shows information for the month of June for each of the products: Finger London Finger Selling price . . . 45.00 Direct material . . - 9.00 Direct labour 9.00 Production overhead . 10.00 Prot per container mm 17-00 Labour hours per container 3 2 Expected demand (containers) 200 250 Due to the forthcoming festive season. demand for the cookies is higher than normal. The Production Manager has informed the Management Accountant that the availability of labour Page 3 of 4 and machine time will be restricted in June. This is because one of the mixing machines will undergo routine maintenance, thus reducing the machine hours available for production to 1,350 hours only. As for labour, only 3,200 labour hours is available for the month. The overheads above are absorbed based on labour hours. Budgeted fixed overheads of RM3,900 for June is absorbed based on 3,000 budgeted labour hours