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Exercise 12-11 Make or Buy a Component IL012-3] Han Products manufactures 18,000 units of part S-6 each year for use on its production line. At
Exercise 12-11 Make or Buy a Component IL012-3] Han Products manufactures 18,000 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: 3.80 Direct materials Direct labor 7.00 Variable manufacturing overhead 3.60 Fixed manufacturing overhead 15.00 29.40 Total cost per part An outside supplier has offered to sell 18,000 units of part S-6 each year to Han Products for $41.50 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 $408,800. 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 a. Calculate the per unit and total relevant cost for buying and making the product? (Round your "per unit" answers to 2 decimal places.) Per Unit 18,000 Units Differential Costs Buy Make Buy Make Cost of purchasing cost of making: Direct materials Direct labor Variable overhead Fixed overhead Total cost
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