Meridian Ltd makes 30 000 units per year of part AS400, which is used in the range of electrical goods it manufactures. The unit costs of this part are as follows: R Direct materials 24.70 Direct labour 16.30 Variable manufacturing overhead 2.30 Fixed manufacturing overhead 13.40 Total 56.70 MBA4807 An outside supplier has offered to supply Meridian Ltd with as many of these parts as it needs at R44.50 each. If the part were purchased from the outside supplier, all direct labour costs associated with the product could be avoided but, in the short term, all fixed overhead costs would have to be reapportioned over the remaining product range. a) Calculate the relevant cost per unit of part AS400 in relation to the decision of whether to make or buy in the part. 6 marks b) If Meridian accepts the offer to purchase the part from the outside supplier, the production facilities now being used to make the part could be used to make 4000 more units of its best-selling product, each of which generates a contribution of R11. Taking into account this additional information, what is the total additional cost or saving of purchasing 30 000 units per year of AS400 rather than making it? 10 marks c) The easiest way to distinguish between relevant and non-relevant costs is by cost behaviour; variable costs are relevant costs and fixed costs are not. Explain briefly why you might agree or disagree with this statement. 9 marks Total 25 marks