Al Husam Co is a manufacturer of jewellery items and latex based products. Jewellery Manufacturing Al Husam Co's diamond-embedded hand-made bangle is a popular and profit-making product. Every bangle comes with 20 diamonds embedded around it. Al Husam Co currently produces and sells 1,000 such bangles each year, but is restricted to increase production due to the shortage in the supply of skilled labour. The company at present purchases uncut diamonds and cuts them to the required sizes in-house using its skilled labour. Al Husam Co at the moment cuts diamonds only for its internal requirement. The company is in a position to import cut diamonds instead, and use its skilled labour to make the bangles. The total annual cost related to the making of bangles and the process of cutting diamonds are as follows. Particulars Direct materials Direct skilled labour Direct unskilled labour Variable production overheads Machine depreciation Other fixed production overheads Bangles (Omani Rial) 500,000 100,000 25,000 30,000 10,000 50,000 715,000 Omani Rial 715 Diamonds (Omani Rial) 200,000 50,000 12,500 10,000 20,000 20,000 312,500 Omani Rial 15.625 Total Unit cost The following additional information is provided. . . The material cost of bangles is expected to increase by 10% next year while the material cost of diamonds is expected to increase by 5%. The cost of bangles does not include any cost of cutting the diamonds. The price per bangle is Omani Rial 1,250. The import cost of cut diamonds is Omani Rial 17 each. The direct labour wages (both skilled and unskilled) would increase by 15% next year. Machine depreciation is product-specific. 40% of other fixed production overhead costs relates to an apportionment of the general factory overheads whilst the balance is specific to the production of the respective product. The management of Al Husam Co is considering discontinuing the diamond cutting operation and increase the production of bangles to 1,500 units with the use of the same skilled and unskilled labour of that division. The cutting machines would be idle but they would still require regular maintenance that will cost the company Omani Rial 25,000 a year. Question: Calculate Profit/Loss on current system of cutting diamonds in-house for making of the bangles for the next year. Also, Calculate Profit/Loss on proposed system of import cut diamonds from overseas markets for next year. And dvise the management of Al Husam Co whether it should continue cutting diamonds in-house for making of the bangles, or import cut diamonds from overseas markets for next year