Exercise 7-11 Make or Buy a Component (L07-3] Han Products manufactures 23,000 units of part 5-6 each year for use on its production line. At this level of activity, the cost per unit for part 5-6 is: 4.44/6.66 points awarded Scored Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total cost per part $ 4.40 6.00 4.10 12.00 $26.50 An outside supplier has offered to sell 23,000 units of part 5-6 each year to Han Products for $41.50 per part. If Han Products accepts this offer, the facilities now being used to manufacture part 5-6 could be rented to another company at an annual rental of $526,000. However, Han Products has determined that two-thirds of the fixed manufacturing overhead being applied to part 5-6 would continue even if part S-6 were purchased from the outside supplier. Required: 1. 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 Differential Costs Make Buy $ 41.50 23,000 Units Make Buy $ 954,500 Cost of purchasing Cost of making: Direct materials Direct labor Variable overhead Fixed overhead Total cost 4.40 6.00 4.10 12.00 X 26.50 101,200 138,000 94,300 276,000 X $ 609,500 $ $ 41.50 $ 954,500 An outside supplier has offered to sell 23,000 units of part 5-6 each year to Han Products for $41.50 per part. If Han Products accepts this offer, the facilities now being used to manufacture part 5-6 could be rented to another company at an annual rental of $526,000. 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: 4.44/6.66 points awarded 1. Calculate the per unit and total relevant cost for buying and making the product. (Round your "per unit" answers to 2 decimal places.) Scored Per Unit Differential 23,000 Units Costs Make Buy Make Buy Cost of purchasing $ 41.50 $ 954,500 Cost of making: Direct materials 4.40 101,200 Direct labor 6.00 138,000 Variable overhead 4.10 94,300 Fixed overhead 12.00 X 276,000 X Total cost $ 26.50 $ 41.50 $ 609,500 $ 954,500 *Red text indicates no response was expected in a cell or a formula-besed calculation is incorrect; no points deducted. 2. How much will profits increase or decrease if the outside supplier's offer is accepted? Profit would increase by S o