Every year, Rizman Company manufactures 20,000 electronic components used in one of its products. The manufacturing cost per unit for these components is as follows: Direct material Direct labor Overhead changed Fixed overhead Total unit cost RM10 14 6 8 RM38 Fixed manufacturing overhead costs are the costs of providing a company manufacturing environment that cannot be used for any other purpose. Recently, the company received an offer from an outside party to supply the component at a price of RM32 per unit. If the offer is accepted, the company will stop the production line of the electronic component. Be required: a) What is the impact on Rizman Company's income if management agrees to buy the component from an external supplier? b) Assume that Rizman Company is able to reduce the fixed manufacturing overhead cost by RM50,000 when it receives the offer from the external supplier. What is the effect on the company's income? QUESTION 2: SPECIAL BOOKING Heritage Company produces and sells trophies for sporting events. The maximum production capacity of the Company is 15,000 trophy units per month. The Company 's monthly production is 12,750 units. The selling price per trophy is RM120. Cost information is as follows: Kos-kos Cost changed: Raw material Direct labor Sales and administration expenses Fixed cost: Manufacturing costs Sales and administration expenses RM RM624,750 306,000 15,300 506,175 123,675 Heritage Company has been offered a special order for 700 trophy units priced at RM83 per unit. These special bookings do not involve changing sales and administration costs, nor do they affect existing fixed costs. Be required: a) Determine whether the Company should accept or reject the special order. b) Explain two (2) qualitative factors that may influence the decision to accept or reject the special order.