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6. Relevant Costs for Decision-Making NZ Brush Company manufactures two boot cleaners - a deluxe model which sells for $135 and a regular model which sells for $95. Each product uses only one raw material that costs $6 per kilogram (kg). The company has the capacity to produce 105 000 units of each product annually. Its average costs per unit for each product at this level of activity is given below. Deluxe Regular S S Direct materials 30 18 Direct labour 23 16 Variable manufacturing overhead 10 8 Traceable fixed manufacturing overhead 19 21 Variable selling expenses 15 11 Common fixed expenses 18 13 Total cost per unit $115 $87 I The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars. Required a. Assume that NZ Brush Company expects to produce and sell 83 000 deluxe models during the current year. One of NZ Brush Company's sales representatives has found a new customer who is willing to buy 13 000 additional Deluxe models for a price of $92 per unit. What is the financial advantage (disadvantage) of accepting the new customer order? (12 marks) b. If NZ Brush Company has normally been producing and selling 50 000 units of the Regular boot cleaners a year, what is the financial advantage (disadvantage) of discontinuing the product line? (6 marks) TOTAL: 18 MARKS