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A study has been conducted to determine if one of the departments in Parry Company should be discontinued. The contribution margin in the department is

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A study has been conducted to determine if one of the departments in Parry Company should be discontinued. The contribution margin in the department is $40,000 per year. Fixed expenses charged to the department are $65,000 per year. It is estimated that $30,000 of these fixed expenses could be eliminated if the department is discontinued. These data indicate that if the department is discontinued, the company's overall net operating income would: Han Products manufactures 30,000 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 as follows: Direct materials Direct labour Variable overhead Fixed overhead Total cost per part $3.50 9.50 2.50 $24.509.00 An outside supplier has offered to sell 26,500 units of part S-6 each year to Han Products for $22.00 per part. If Han Products accepts this offer, the facilities now being used to manufacture part $6 could be rented to another company at an annual rental of $84,000. However, Han Products has determined that 30\% of the fixed overhead being applied to part S-6 will be avoided if part S-6 is purchased from the outside supplier. Required: 1. What is the net dollar advantage or disadvantage of accepting the outside supplier's offer? (Round "Total cosis" and final answer to the nearest whole dollar amount.)

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