Tesla currently utilises various leading external electronics suppliers to support the firm's electronic battery requirements. The following case presents hypothetical information regarding a possible decision by Tesla to ramp up its own capacity to produce electronic batteries for one of its car models and reduce the firm's dependence on external suppliers.

The current cost to acquire batteries from external suppliers is $6,000 per unit and the firm requires 80,000 units per year. If these batteries are made internally, the following costs have been estimated:

Direct materials	$2,450 per unit
Direct labour	$1,600 per unit
Variable overhead	$1,800 per unit
Total fixed overhead	$75 million per year*

* Includes $35 million of allocated depreciation costs associated with factory space that is currently vacant and will be utilised if the batteries are made internally. Other costs included in this total are associated directly with the internal production of batteries.

If the firm produces the batteries internally, beyond meeting its own production requirement, batteries will also be produced for external customers. It is estimated that the annual external demand for these batteries will be 5,000 per year and the market price for these batteries will be $8,000.

Required:

1. Evaluate whether this proposal is acceptable on financial grounds. Ensure that your answer is discussed and supported by relevant calculations/workings (2 marks).
2. Identify and discuss three relevant qualitative factors that should be considered in the evaluation of this proposal (3 marks).

All calculations must be performed in Excel and your excel file must be supplied (penalties will apply if you do not comply with this requirement).