Question 1 - Relevant Costs A manufacturer has been purchasing components for $350 a unit as an input to its manufacturing process. The factory currently operates at 80% of capacity. The company has skilled labour and a training budget to update skills of workers. The company operates in a city where skilled labour is tough to find. The cost per unit to make these components at the factory is estimated as follows: Direct materials $ 100 Direct labour 175 Variable factory overhead 50 Depreciation on factory equipment 25 Other fixed factory overhead 50 Total estimated cost per unit $ 400 Purchases have been 10,000 units Total budget estimate $4,000,000 Questions: 1. What type of specific analysis is the above example? (1 mark) 2. Use quantitative analysis to assess whether the company should change from purchasing the components. (8 marks) 3. What is an important strategic consideration in making the above decision? (1 mark)