Armidale Company $(AC)$ deals in the manufacture of Part ZM that forms part of CNT Hardware,

the company's final$/$complete product. For $2023,$ the company's business books contain the

following pieces of information on the manufacturing cost $($per unit$)$ of Part ZM:

The Sale and Purchase Manager at the Tamworth Company $($TC$),$ another manufacturing

business that produces Part ZM$,$ approached AC and offered a deal, under which TC will sell to

AC $6,501$ parts ZM for $$134$ per part. If AC management agrees to accept this offer, the deal

would save AC $$251,000$ from its currently committed fixed overhead costs.

Required:

Work out, showing all your calculations, the total amount of costs that are 'relevant' to

the decision AC management is considering as to whether it should accept TC$\text{'}$s offer

alternative A or reject it and continue making part ZM in$-$house $($alternative B$)?$

You are currently working as a junior management accountant at $AC.$ The manager

responsible for making the final decision whether to accept or reject TC$\text{'}$s offer

approaches you and asks for your support to help him make the decision. Showing all

your working$/$calculations about the difference in the total relevant cost to $AC$ under the

two alternatives, will you advise the manager to accept TC$\text{'}$s offer or reject it$?$