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Ann Products manufactures 50.000 units of parts 6 each year for use on its production line. At this level of activity, the cost per unit
Ann Products manufactures 50.000 units of parts 6 each year for use on its production line. At this level of activity, the cost per unit for part S6 is as follows: Direct materials Direct Labour Variable overhead Fixed overhead Total cost per part $ 5.50 11.50 4.50 10.20 $31.70 An outside supplier has offered to sell 43,500 units of parts 6 each year to Han Products for $28.00 per part I Han Products accepts this offer, the facilities now being used to manufacture part S6 could be rented to another company at an annual rental of $100,000. However, Han Products has determined that 30% of the fored overhead being applied to part S6 will be avoided if partS-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 costs and final answer to the nearest whole dollar amount) Net dollar disadvantage $ 55,000 2. What is the annual rental value at which the company will be indifferent between the two options? (Round Total costs and final anwer to the nearest whale dollar amount
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