QUESTION 3: MAKE VS BUY Sehati Sejiwa Company is considering a decision on whether to (1) continue manufacturing XYZ-1 components by renting a new machine at a cost of RM60,000 per year or (2) stopping manufacturing XYZ-1 components and buying them from outside suppliers at an offer price of RM8.50 per unit. The cost per unit to make XYZ-1 components yourself using an old machine is as follows: Direct material Direct labor Overhead changes Fixed cost (Supervision RM0.75, machine RM 2.75 4.00 0.60 depreciation RM0.90 3.65 and general overhead RM2) Total unit cost 11.00 The above costs are based on the current level of activity of 50,000 units of XYZ-1 per year. New machines are more efficient and can reduce direct labor costs by 10% and variable overhead costs by 25%. Supervision costs (RM30,000) and direct material costs will not change with the use of new machines. Production capacity for new 2 machines is 60,000 units of XYZ-1 components per year. Even if components are purchased from outside suppliers, general overhead costs will still be involved. Be required: a) Suggest the best alternative that Sehati Sejiwa Company should take if 50,000 units of XYZ-1 components are needed each year. Show your calculations clearly. b) Is your suggestion above the same if 60,000 units of XYZ-1 components are needed each year? Show your calculations clearly. QUESTION 4: SPECIAL BOOKING Syarikat Pahlawan is considering a special order from the buyer for 200 units of SmartX products at a price of RM130 per unit. If this special order is accepted, the Company's normal sales will not be affected as the Company has sufficient capacity to produce additional units. The normal selling price of SmartX products is RM150 with the cost per unit of the product as follows: Direct material Direct labor (1.6 hours direct labor) Manufacturing overhead (RM28 x 1.6 hours direct labor) The cost per unit of product RM 67.00 32.00 44.80 RM 143.80 The predetermined manufacturing overhead rate for the Hero Company is RM28 per hour of direct labor calculated based on the following information: Manufacturing overhead is changing Fixed manufacturing overhead Direct working hours RM 180,000 RM 380,000 20,000 hours Be required: Identify the impact on the Company's profit if this special order is accepted. Determine whether the Company should accept or reject the special order.