Han products manufactures 21,000 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 $3.80

Direct labor $6.00

Variable manufacturing overhead $2.40

Fixed manufacturing overhead $12.00

Total cost per part $24.20

An outside supplier has offered to sell 21,000 units of part S-6 each year to Han Products for $40.00 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 $496,800. 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.

• 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	21,000 Units
	Make	Buy	Make	Buy
Cost of purchasing
Cost of making:
Direct materials
Direct labor
Variable overhead
Fixed overhead
Total cost