masi ey Capital velen QUESTION 3 (25 marks) idev Santai Bhd produ product at the ices a single product. The cost of producing and selling a single unit of this company's normal capacity level of 60,000 units per month is as follows: Direct material Direct labour RM34.00 RM 4.00 RM 2.00 RM21.30 RM 2.70 RM 7.00 Variable manufacturing overhead Fixed manufacturing overhead Variable selling& administration Fixed selling & administration The normal selling price of the product is RM79.80. An order has been received from overseas customer for 2,000 units to be delivered this month at a special discounted price. This has no effect the company's normal sales and will not change the total amount of the company's fixed costs. The variable selling and administrative expense would be decreased by RMO.30 per unit on this order than on the normal sales. Direct labor is a variable cost to this company. Required: a) Suppose there is ample idle capacity to produce the units required by the overseas customer and the special discounted price on the special order is RM71.60 per unit. Compute the increase/ (decrease) of the income statement of the company for the month with this special order (10 marks b) Suppose the company is already operating at capacity when the order is received from th overseas customer. Compute the opportunity cost of each unit delivered to the oversea customer (3 mark ) Suppose there is not enough idle capacity to produce all the units for the overseas custon and accepting the order would require cutting back on production of 700 units for regu customers. Compute the minimum acceptable price per unit for the special order. mar Define what is relevant cost ma Discuss TWO (2) advantages of vertical integration (4 m