Chapter 19 - Relevant cost analysis for decision making Part A Glory Industrial Ltd manufactures three products which requires a common component called SAR. The estimated requirement is 4,000 units per year. The unit production costs of SAR are as follows: Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead Unit product cost $35 10 8 20 $73 An outside supplier has offered to sell all the 4,000 units of SAR required by Brighten Ltd. If the management decides to discontinue making SAR, 40% of the above fixed manufacturing overhead costs could be avoided. Required: Assume that there is no other alternative use for the facilities presently devoted to production of SAR. If the outside supplier offers to sell the SAR for $65 each, should the company accept the offer? Fully support your answer with appropriate calculations