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:

Direct materials	$	4.20
Direct labor		7.00
Variable manufacturing overhead		3.30
Fixed manufacturing overhead		15.00
Total cost per part	$	29.50

An outside supplier has offered to sell 20,000 units of part S-6 each year to Han Products for $46.00 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 $527,000. 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.	Calculate the per unit and total relevant cost for buying and making the product? (Round your "per unit" answers to 2 decimal places.)

b.	How much will profits increase or decrease if the outside suppliers offer is accepted?

Required: a. Calculate the per unit and total relevant cost for buying and making the product? (Round your "pe unit" answers to 2 decimal places.) Per Unit Differential Costs 20,000 Units Make Buy Make Buy Cost of purchasing Cost of making: Direct materials Direct labor Variable overhead Fixed overhead Total cost b. How much will profits increase or decrease if the outside supplier's offer is accepted? Profit would by