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EXERCISE 9-4 Determining Whether to Make or Buy (L01 - CC4] Hun Products manufactures 55,500 units of part S-6 each year for use on its
EXERCISE 9-4 Determining Whether to Make or Buy (L01 - CC4] Hun Products manufactures 55,500 units of part S-6 each year for use on its production line. At this levde activity, the cost per unit for part S-6 is as follows: Direct materials $ 6.66 Direct labour 18.50 Variable overhead Fixed overhead 16.65 $46.25 Total cost per part An outside supplier has offered to sell 48,000 units of part S-6 each year to Han Products for $38.85 per part If Han Products accepts this offer, the facilities now being used to manufacture part S-6 could be remed te another company at an annual rental of $148,000. However. Han Products has determined that 3075 d de fixed overhead being applied to part 5-6 will be avoided if part S-6 is purchased from the outside suppliet Required: 1. Prepare computations to show the net dollar advantage or disadvantage of accepting the outside supplier's att 2
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