Time left 0:57:41 Question 2 (30 points) Humble shoe and company manufactures lady shoes in a factory in Malaysia and sells them to various retailers in Singapore. Consider each of the following situations (a) and (b) independently, a) In January, the company has the capacity to produce 18,000 pairs of shoes each month, current monthly production is 15,300 pairs of shoes. The company normally charges 541 per pair of shoes. Cost data for the current level of production are shown below: Variable Direct Materials Variable Direct Labour Variable Selling and Administrative Administrative Fixed Manufacturing Costs Fixed Selling and Administrative 594,860 $29,070 54.131 $57,987 $13,464 The company has just received a special one-time order for 900 pairs of shoes. For this particular order, no variable selling and administrative costs would be incurred. This order would also have no effect on fixed costs as the company has spare capacity to accommodate this order. What is the minimum price per pair of shoes for this one-time special order? b) In February, the company has the capacity to produce 18,000 pairs of shoes each month, current monthly production is 15.300 pairs of shoes. The company has just received a new order of 5,000 shoes. The company can fulfil the order by giving up some of the existing sales. Alternatively, an outside supplier has offered to manufacture the entire 5,000 pairs of shoes for 512 each. The product cost per pair of shoes as per the company records are: Variable Direct Materials Variable Direct Labour Variable Manufacturing costs Fixed Manufacturing Costs Product Cost per pair $6.20 $1.90 50.27 $3.79 $12.16 If the shoes are outsourced, all variable costs can be avoided. Total fixed costs will remain the same. If the 5,000 pairs of shoes are made in house, certain machine time would have to be freed up for manufacturing other shoes that require 2 minutes per pair on the constraining machine and that have a contribution margin of 530 per pair. The new order of 5,000 pairs of shoes also requires 2 minutes per pair of the constraining machine time. Compute the total costs of manufacturing the 5,000 pairs of shoes in house and outsource. What is the net benefit or cost of outsourcing