Question 2 FG Company makes 40,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows: Direct materials RM23.40 Direct labor 22.30 Variable manufacturing overhead. 1.40 Fixed manufacturing overhead. 24.60 Unit product cost. RM21.70 An outside supplier has offered to sell the company all of these parts it needs for RM59.20 a unit. If the company accepts this offer, the facilities now being used to make the part could be used to make more units of another product that is in high demand. The additional contribution margin on this other product would be RM352,000 per year. If the part were purchased from the outside supplier, all of the direct labour cost of the part would be avoided. However, RM21.90 of the above fixed manufacturing overhead cost being applied to the part would continue even if the part were purchased from the outside supplier. This fixed manufacturing overhead cost would be applied to the company's remaining products. Required: (a) How much of the unit product cost of RM71.70 is relevant in the decision of whether to make or buy the part? (5 marks) (b) What is the net cash inflow (or outflow) of purchasing 40,000 part units instead of making it? Is it a worthwhile decision to purchase the part? Why? (5 marks) (c) What is the maximum amount the company should be willing to pay an outside supplier for each part unit if the supplier commits to supplying all 40,000 units required each year? (4 marks) (d) Identify and discuss THREE (3) non-financial factors that the company should consider when making outsourcing decisions. (11 marks) [Total: 25 Marks]