QUESTION 4 (10 marks; 18 minutes) Your unit appointed you as the chairman of SAFI. Florets, a subsidiary of SAFI owns a successful flower shower called Always Blooming which is run by Kara. CONFIDENTIAL Kara came with the following proposal for Florets at the executive committee meeting: Due to the demand, she wants to expand the shop by leasing the space next door for R1 200 per month, adding refrigerators to keep the flowers fresh and adding two checkout counters so that customers do not have to wait in long lines. 4.1 Required: 4.2 5 . She currently pays R1 000 per month for the current store space and has two refrigerators that cost R6 000 each two years ago. She figures that the new refrigerators and counters will cost R25 000. She also has determined that the current cash register that initially cost R1 000 two years ago and has been depreciated at R250 each year would have to be replaced with two new cash registers costing R1 500 each. She thinks sales would increase by R10 000 per month. Variable costs are 40% of sales. What are the relevant cost and benefits of expanding into the new space? What are the irrelevant costs and benefits of expanding into the new space?