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Question #5 [12 points] Quilter's Nest Inc. (QNI) is a sewing and quilting company that manufactures quality bedding, including high-end quilts. The company has reached its quilt-producing capacity with its current quilting machine and needs to quickly make a decision to either rent a second machine or to buy from another supplier. QNI expects demand for their quilts to increase by 100 units in the next period. The company's most recent annual income statement for the Quilt Division has been provided:The company's most recent annual income statement for the Quilt Division has Quilter's Nest Inc. Variable Cost Method - Income Statement Quilt Division Sales (300 units) $ 450,000 Variable expenses: Direct Materials S 88,500 Direct Labour 69,000 Variable Manufacturing Overhead 64,500 222,000 Variable Selling and Admin 3,000 Contribution Margin 225,000 Fixed Expenses: Fixed Manufacturing Overhead 80,000 Fixed Selling and Administrative 60,000 Total Fixed expenses 140,000 Net Operating Income S 85,000The new machine would be more efficient and, according to the manufacturer, would reduce direct material costs by 10% and variable manufacturing overhead by 20%. The new machine will have a capacity to produce 500 units. Another supervisor would be required to oversee the machine operations which would cost the company an additional $40,000 per year. Rent and maintenance costs for the new machine would be $2,500 per month. The total general company overhead would be unaffected by this decision. QNI can buy quilts from another local supplier for $1,200 per quilt. Required: a. The owner is unsure what the company should do and would like an analysis showing the unit costs and total costs for each of the two alternatives given above. Which course of action would you recommend based on the above information? [5 points] b. Would your recommendation in (a) above be the same of the company's additional demand was 200 units instead of 100 units? [4 points] c. List and describe three other factors that you would advise the owner to consider before making a decision. [3 points]