SECTION B QUESTION 4 Blooming enterprise sells fresh flowers since 2018. Currently, the business has two refrigerators which cost RM6,000 each and a cash register machine RM1,000 at cost. The estimated useful life of refrigerator and cash register machine are 5 years and 3 years respectively. The business also pays RM1,00 rentals per month. Blooming Enterprise plans to expand the business by renting the next-door shop lot for RM1,200 per month. The business also plans to purchase an additional refrigerator and two cash register machines with estimated cost RM25,000. With the expansion plan, the business anticipates that sales would increase by RM10,000 per month and variable costs increase by 40% of sales. Required: [10 marks] (b) Kath Kidston Sdn Bhd. Produces pouches. Each pouch uses one fancy button. The company is considering whether to make the buttons based on normal capacity of 50,000 units. Items Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead RM 3.50 per unit 1.75 per unit 0.95 per unit 5,000 If the company decides to buy the button, the price offered by supplier is RM5.50 per unit and the production machine can be sold at RM25,000. Required: Provide the incremental/differential analysis for the decision to make or buy the button at normal capacity. (Answer: should buy because the net income will increase by RM60,000) [10 marks]