Use the following information for questions $4-6.$

Fairfeld Company is vertically integrated. The company makes a component in the process of manufacturing its prmary product. An outside manufacturer has offered to sell Fairfield Co the component at a cost of $$20$ per unit. Fairfield Company's costs to manufacture the components are as follows:

Direct Materials $$6$

Direct Labour $3$

Variable Mfg$.$ Overhead $5$

Fixed Mfg$.$ Overhead $8$

Total $$22$

Fixed Mfg OH includes $$2$ of avoidable fixed OH costs related to the supervisor's salary and S $6$ of allocated costs. Assume the quality of the components are the same when made by the outside manufacturer. The outside manufacturer can deliver the components as needed on time and Faiffield has no other use for its facilities used when they make the component.

II

$4.$ What are the total relevant costs? $(2$ marks$)$

$5.$ How much does Faiffield save by continuing to make the product? $(3$ marks$)$

$6.$ Should Fairfield continue to make the component themselves? Why or why not? $(2$ marks$)$