PARTA (8 marks) Ottoto makes a line of bathroom accessories. Due of a decline in sales, the company has 10,000 machine hours of idle capacity available each year. This idle capacity could be used by the company to make. rather than buy; one of the components used in its production process. Ortoto needs 5,000 units of this component each year. At present, the component is being purchased from an ouside supplier at $7.50 per unit. Variable production cost for the component would be $4.10 per unit, and additional supervisory costs would be $18,000 per year. Already existing fixed costs that would be allocated to this part amount to $300,000 per year. Requircd: Calculate the financial effects on the company's net operating income if the coanponent is manufactured internally using the idle capacity. (8 marks) Part If (17 marks) During November, ChemiZ, Phe L.td produced 1,000 units of a special product called SleepZ, and the costing records indicated the following: Slecp2 has the following standard prime costs: Dircet matcrial: 20kg @ $1.35 Direct labour bours: 4 hours Standard prime cost per unit $27.00 568.00 505.00 Required: (a) Calculate the standard direct material costs and direct labour costs for Novenaber. (3 marks) (b) Calculate the raw materials price variance and materials usage variance, indicating a favourable of unfavourable variance. (6 marks) (c) Calculate the labour rate variance and labour efficiency variance, indicating a favourable or unfavourable variance. (6 marks) (d) Considering ONLY the material variances, would you as the ownet of Chemiz. continue to purchase the direct materials from the current supphicr? Support your decision with appropriate reasons. (2 marks)