Cairney, Incorporated manufactures a specialized part used in internal combustion engines. The annual demand for the part is

$265,000$ units. The facility has a practical capacity of $280,000$ units annually. The company leased the current facility because facilities

capable of manufacturing the unit require machines that can produce $70,000$ units each. The annual cost of the facility is $$1,120,000.$

The variable cost of a part is $$4.$

Required:

a$.$ What cost per unit should the cost system report to facilitate management decision making?

Note: Round your answer to $2$ decimal places.

b$.$ What is the cost of excess capacity?

a$.$ Cost per unit

b$.$ Cost of excess capacity