D Question 19 5 pts Question E: Part 2 Each year, FosterCo produces 40,000 units of a component to use in transcontinental blimps. An outside supplier has offered to supply the part for $4.44. The unit cost is; Direct Materials: $1.55 $0.95 Direct Labor: Variable MOH: $1.45 Fixed MOH: $0.64 Fixed MOH is applied on the basis of machine hours: the component requires 12,000 machine hours per year. If $16,500 of fixed overhead is rental of equipment used in production of this component and can be avoided if the component is purchased from the outside supplier, which alternative (make the part internally or purchase from the outside supplier) is more cost effective and what is the relevant cost between options? O $3.05 / internally O $3.05 / outside supplier O $4.36 / internally O $4.36 / outside supplier $4.44 / Internally 5 pts Question 20 5 pts Question E: Part 3 Foster Paper Products, Inc., manufactures boxed stationary for sale to specialty shops. Currently, the company is operating at 90 percent of capacity which leaves sufficient capacity to consider a special order. A chain of drugstores has offered to buy 32,000 boxes of Foster's thank-you notes as long as the box can be customized with the drugstore chain's logo. While the normal seling price is $6.00 per box, the chain has offered just $3.05 per box. Foster can accommodate the special order without affecting current sales. Unit cost information for a box of thank-you notes follows: Direct materials: $1.98 Direct labor: $ 0.45 Variable overhead: .18 Fixed overhead: $2.45 Total cost per box $5.06 Fixed overhead if $420,000 per year and will not be affected by the special order. Normally, there is a commission of 5 percent of price: this will not be paid on the special order since the drugstore chain is clealing directly with the company. The special order will require additional fixed costs of $9,600 for the design and setup of the machinery to stamp the drugstore chain's logo on each box, What is the effect on operating income for the company as a whole if Foster chooses to accept the special order? O $1.480 increase $4,480 decrease $4,480 Increase $5.480 decrease $5,480 increase