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Exercise 12-11 Make or Buy Decision (LO12-3] Han Products manufactures 20,000 units of parts 6 each year for use on its production line. At this

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Exercise 12-11 Make or Buy Decision (LO12-3] Han Products manufactures 20,000 units of parts 6 each year for use on its production line. At this level of activity, the cost per unit for part 5-6 is: $ Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total cost per part 3.40 8.00 2.60 9.00 $23.80 An outside supplier has offered to sell 20,000 units of part 5-6 each year to Han Products for $19 per part. If Han Products accepts this offer, the facilities now being used to manufacture part 5-6 could be rented to another company at an annual rental of $70,000. However, Han Products has determined that two-thirds of the fixed manufacturing overhead being applied to part 5-6 would continue even if part 5-6 were purchased from the outside supplier. Required: What is the financial advantage (disadvantage) of accepting the outside supplier's offer? Financial advantage Financial (disadvantage)

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