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Business, 30.04.2021 21:50 166386

Han Products manufactures 37000 units of part S-6 each year for use on its production line. A this level of activity, the ost per unit for part S-6 is: Direct materials $3.60
Direct labor 9.00
Variable manufacturing overhead 2.40
Fixed manufacturing overhead 6.0
Total cost per part $21

An outside supplier has offered to sell 37.000 units of part S-6 each year to Han Products for 319 per part. If Han Products accepts this offer. the facilities now being used to manufacture part S-6 could be rented to another company at an annual rental of 387000. However. Han Products has determined that two-thirds of the fixed manufacturing overhead being applied to part S-6 would continue even if part S-6 were purchased from the outside supplier.

Required:
What is the financial advantage (disadvantage) Of accepting the outside supplier's offer?

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Han Products manufactures 37000 units of part S-6 each year for use on its production line. A this l...
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