Salmi Sdn Bhd (SSB) operates in a large town area. Currently, SSB has its own factory to produce butter cookies. The unit cost to produce the butter cookies are as follows: RM Raw materials 0.4 Direct labour 0.5 Variable overhead 0.3 Fixed overhead 0.6 Total 1.8 Fixed overhead is detailed as follows: RM Avoidable fixed overhead 2,000 Depreciation of equipment 1,000 A local manufacturer has offered to supply SSB all the butter cookies it needs. Its price is RM1.70. If the offer is accepted, the equipment used by SSB would be scrapped (it is old and has no market value). SSB produce 5,000 butter cookies per month.

Required: Analyze and determine whether SSB should continue to make its own butter cookies or to purchase from the external supplier. (5 Marks)