Exercise on Internal linkages-Cost Management Example) Below is information related to the activities in AWERA Firm and the activity cost data: Activities Activity Activity Current Expected Activity Driver Capacity Activity Demand Demand Activity1 Direct Labor Hours 100,000 100,000 60,000 Activity 2 No. of Orders 5,000 5,000 4,500 Activity 3 No. of Defective Products 500 400 200 Activity1: AED 5 per Direct Labor Hour, no fixed cost. Activity2: Two salaried employees, with an annual salary of AED 20,000 for each. Each employee is capable for 3,000 orders annually. Variable cost per order is AED1. Activity3: two repair agencies, an annual salary of AED 15,000 for each. Each agency is capable for 200 product units. Variable cost per order is AED2. Required: a. Calculate the cost reduction from exploiting the internal linkages within the company's activities. (3.5 marks) b. Comment on the results in light of strategic cost management. (1.5 mark)