Company makes 40,000 units per year of a part that it uses in the products it manufactures. The unit product cost of this part is computed as follows: Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead Unit product cost $ 11.30 $ 22.70 $ 1.20 $ 24.70 $ 59.90 An outside supplier has offered to sell the company all the parts that company needs for $46.20 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 $264,000 per year. If the part were purchased from the outside supplier, all direct labour cost of the part would be avoided. However, $21.90 of the fixed manufacturing overhead cost 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. Calculate how much of the unit product cost of $59.90 is relevant in the decision of whether to make or buy the part b. Calculate the net total dollar advantage (disadvantage) of purchasing the part rather than making it C. Calculate the maximum amount the company should be willing to pay an outside supplier per unit for the part if the supplier commits to supplying all 40,000 units required each year Q. HII {8 marks) Lego Inc. has three product lines in its retail stores: Children 3-5 years, Children 6-10 years, and Children 12+ years old. The allocated fixed costs are based on revenue and are unavoidable. Results of the fourth quarter are presented below: Children 3-5 Units sold 750 Revenue $22,500 Variable departmental costs 12,000 Direct fixed costs 4,000 Allocated fixed costs 4,777 Net income (loss) $ 1.723 Children 12+ Children 6-10 1,000 1,200 $15,000 $9,600 8,000 5,000 3,000 4,500 3,185 2,038 $815 $(1.938) Total 2,950 $47,100 25,000 11,500 10,000 $600 Demand of individual products is not affected by changes in other product lines. Required In a table format prepare an incremental analysis of the effect of dropping the Children 6-10 product line