Birders Ltd. manufactures and sells bird feeders. The company currently manufactures all the component parts including a wooden door The company's unit product cost, based on based on a production level of 20,000 doors per year is as follows: 1 2 3 Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead, traceable Feed manufacturing overhead, allocated Unit product cost Per Door Total $8.00 10.00 3.00 6.00 $120,000 12.00 240,000 $39.00 6 7 8 9 10 11 12 13 14 40% . Depreciation of special equipment Supervisory salaries 50% #allocated on the basis of direct labour-hours An outside supplier has offered to supply the doors to Birders Ltd. for only $25 per door. If the doors were purchased, Birders Ltd. could use the freed up capacity to launch a new product that would generate $30,000 in segment margin for the year. 15 Required: Should Birders Ltd. accept the supplier's offer? (5 marks) Buy Per unit Total 20,000 Number of units Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead, traceable Supplier purchase price Additional segment margin Make Per unit Total 20,000 8 160000 $10.00 $200,000 3.00 60,000 3.60 72,000 25 500000 30000 $0.00 SO Total relevant costs Decision: Reason