Question $2(20$ minutes, $12$ marks$)$

Foster Company makes $20,000$ units per year $of$ a part $it$ uses $in$ the products $it$ manufactures. The unit product cost $of$ this part $is$ computed $as$ follows:

$An$ outside supplier has offered $to$ sell the company all these parts $it$ needs for $$56\mathrm{.}00$ a unit. $If$ the company accepts this offer, the facilities now being used $to$ make the part could $be$ used $to$ make more units $of$ a product that $isin$ high demand. The additional contribution margin $on$ this other product would $be$ $$50,000$ per year.

$If$ the part were purchased from the outside supplier, all the direct labour cost $of$ the part would $be$ avoided. However, $$5\mathrm{.}10of$ the fixed manufacturing overhead cost being applied $to$ the part would continue even $if$ the part were purchased from the outside supplier. This fixed manufacturing overhead cost would $be$ applied $to$ the company's remaining products.

Required:

$a.$ How much $of$ the unit product cost $of$ $$56\mathrm{.}70is$ relevant $in$ the decision $of$ whether $to$ make $or$ buy the part? $(2$ marks$)$

$b.$ What $is$ the net total dollar advantage $(disadvantage)of$ purchasing the part rather than