Han Products manufactures 20,000 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 as follows:

Direct materials	$5.10
Direct labor	6.00
Variable manufacturing overhead	2.50
Fixed manufacturing overhead	12.00
Total cost per part	$25.60

An outside supplier has offered to sell 20,000 units of part S-6 each year to Han Products for $48.00 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 $613,000. 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:

(a)	What is the total amount of avoidable costs if Han buys the units from an outside supplier? (Omit the "$" sign in your response.)

Total cost

$

(b)	How much will profits increase or decrease if the outside supplier's offer is accepted? (Input the amount as positive value. Omit the "$" sign in your response.)

Profits would (Click to select) increase decrease by

$