Click here to submit your course evaluation Sidhu Inc. produce 20,000 units per year of a part that it uses internally. The unit product cost of this part is computed as follows: Direct Materials $24.70 Direct Labour $16.30 Variable Manufacturing Overhead $12.30 Fixed Manufacturing Overhead $3.40 Unit Product Cost $56.70 An outside supplier has offered to sell the company all the parts that Sidhu needs for $51.80 a unit. If the company accepts this offer the facilities now being used to make the part could be used to make more units of a product that is in high demand. The additional contribution margin on this other product would be $44,000 per year If the part were purchased from the outside supplier, all of the direct labour cost of the part would be avoided. However, $5 10 of the fixed manufacturing overhead cost that is being applied to the part would continue, even if the part were purchased from the outside supplier This fixed manufacturing overhead cost would be applied to the company's remaining products Required: a) How much of the unit product cost of $56 70 is relevant in the decision of whether to make or buy the part? Direct Materials Direct Labour S Variable Manufacturing Overhead s Fixed Manufacturing Overhead Relevant Manufacturing Cost ) ENG 20 115) MUU) quiz/attempt.php?attempt=20617&cmid=113946&page=16 @ b) Complete the following schedule to allocate Service Department costs to the Production Departments by the step-down method, allocating Custodial Services first, and amounts to the nearest whole dollar Service Departments Production Departments Services Custodial Maintenance Cutting Milling Assembly Budgeted costs $18,000 $8,000 $80,000 $50,000 $90,000 before allocation Allocation of (18,000) Custodial Services: Maintenance Cutting Milling Assembly Allocation of Maintenance: Cutting 10,000/20.000 $ 11,600 Milling 8000/20,000 $11.600 Assembly 8.000/20 000 $11,600 Costs after allocation