#3

Han Products manufactures 31,000 units of part 5.6 each year for use on its production line. At this level of activity, the cost per unit for part 56 is An outside supplier has offered to sell 31,000 units of part S-6 each year to Han Products for $18 per part If Han Products accepts this offer, the focilites now being used to manufacture part $.6 could be rented to another company at an annual rental of $81,000. However, Han Products has determined that two-thirds of the foxed manufacturing overhead being applied to port $6 would continue even if part $6 were purchased from the outside supplier. Required: What is the financial advantage (disadvantage) of occepting the outside supplier's offer