Engineering Lirrliied makes two components and a wide range of products. The company is reviewing next year's production. Shown below are the detailed unit costs and budgeted production for the two components and two of the products manufactured by the company. CmpEt 9 CUITIIJHIDEIIT 15 Premium X10 Prdfi Y2 {:E Er unit} [E nor unit) {13 nor unit] {:E or unit]: Direct material 26 12 28 Direct variable labour 12 24 Variable overhead 12 Fixed overhead 20 2 Total eeet 62 Annual 7000 units 6000 units 5000 units 4000 unitSs roduetiom'sales The above sales forecasts, along with forecast sales of the other products can all be met by the company working at full capacity in the forthcoming year. Capacity is measured by direct labour hours which are used for the allocation of xed costs. The current selling price ofpnoduct X10 is 50 and of Y2 is 96. Components 9 and 15 are incorporated into other products made and sold by Engineering Ltd, but not incorporated into Product X10 or Y2. The company could outsource both components to Groundbreakcrs Ltd who would be prepared to make them for Engineering Ltd and would charge 60 per unit for Component 9 and 30 per unit for l{Ziarimponcnt 15. Required: For each separate situation below provide calculations to indicate whether nancially it would he better Jfor the company to buy rather than make either component. a] The initial situation described above. {8 marks) b) New government regulations mean that if Engineering Ltd continues to produce either component it will need to acquire inspection facilities requiring additional fixed expenses of 515,000 for per year not included in the above costs. Inspection facilities are already in place at Groundbreakcrs Ltd and included in their prices. (4 marks) c] Engineering Ltd has been approached by a new customer who wishes to buy 10,000 additional units of Product X10 at a price of 52. There is not sufcient capacity to meet this without outsourcing some component manufacture. (8 marks) d] Explain other factors which may be relevant to the outsourcing decision. {5 marks)