9.3

Han Products manufactures 32,000 units of part S-6 each year for use on its production line. At this level of activity, the cost per unit for part S. 6 is: An outside supplier has offered to sell 32.000 units of part S.6 each year to Han Products for $19 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 $82,000. However, Han Products has determined that two-thirds of the fixed manufacturing overhead being appllied to part S.6 would continue even if part $6 were purchased from the outside suppller. Required: What is the financial advantage (disadvantage) of accepting the outside supplier's offer