Case #4 Flowers Ltd. prepares and sells large flower bouquets for all occasions. Currently, workers at the production shop produce baskets that are used in each flower arrangements. Based on annual sales of 15,000 units, Flowers Ltd. incurs the following costs: Fixed manufacturing costs $120,000 Variable costs per unit: Direct materials $22.40 Direct labour $4.20 Variable overhead $19.60 Recently, the owner of Flowers Ltd. was approached by another company offering to sell pre- made baskets to Flowers Inc. at a cost of $17.60 each. If Flowers Ltd. buys baskets from the vendor, they will reduce variable labour costs and variable overhead costs by 50%; however, the company will still need to use $5.60 of direct materials in the preparation of each flower arrangement. Required (A)Should Flowers Ltd. accept the offer and buy baskets from the vendor? Support your recommendation with calculations. (B) What other factors should companies consider before deciding whether to outsource production to an outside vendor? Case #3 Pantier Inc. is considering dropping one of its product lines, the BH4, due to losses experienced over the past quarter. To help with this decision, the company's cost accountant has gathered the following information: $900.000 Sales (for 1.000 units) Manufacturing costs: Direct materials Direct labour Overhead support Operating income (loss) 504.000 108,000 360,000 -$72,000.00 Overhead support costs are 85% variable. The remining 15% is depreciation of special equipment used in production of the BH4 that does not have any resale value. Required (A) Based on financial considerations alone, should the company drop the product line? By how much would income increase or decrease by dropping the product line? (B) What other factors should a company consider before deciding whether to drop a product line