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The Patio Furniture Company makes 55,XXX units per year of a part it uses in its manufacturing process. The unit product cost of this part

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The Patio Furniture Company makes 55,XXX units per year of a part it uses in its manufacturing process. The unit product cost of this part is calculated as shown below. NOTE: You must fill in the last THREE digits of this number based on your student number. For example, if your Student Number is T123456, then the number of units will be 40,456. 29.78 19.50 3.25 Direct materials $ Direct labour $ Variable manufacturing overhead Fixed manufacturing overhead $ Individual unit cost 14.90 67.43 An external supplier has offered to sell the company the parts for $64.00 per unit. If the company accepts this offer, the facilities used to make the part could be used to make more units of a product that is in higher demand. The additional contribution margin on the other product would be $65,000 per year. If the part were purchased from the external supplier, all direct labour costs incurred to make the part would be avoided. However, $6.75 of the fixed manufacturing overhead cost currently being applied to the part would continue even if the part were purchased from an outside supplier. This portion of fixed manufacturing overhead cost will be applied to the company's remaining products. would be avoided. However, $6.75 of the fixed manufacturing overhead cost currently being applied to the part would continue even if the part were purchased from an outside supplier. This portion of fixed manufacturing overhead cost will be applied to the company's remaining products. REQUIRED: a) How much of the unit product cost of $67.43 is relevant in the decision to make or buy the part? (5 Marks) b) What is the net total dollar advantage (disadvantage) of purchasing versus making the part? (4 Marks) c) What is the maximum amount The Patio Furniture Company would be willing to pay per unit if the vendor commits to supplying all 55,XXX units required each year? (5 Marks) NOTE: You should round your answers to TWO decimal places

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