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Han Products manufactures 22,000 units of part 56 each year for use on its production line At this level of activity, the cost per unit
Han Products manufactures 22,000 units of part 56 each year for use on its production line At this level of activity, the cost per unit for part 8-6 is: Direct materials $ 3.60 Direct labor 10.00 Variable manufacturing overhead 2.40 Fixed manufacturing overhead 6.00 Total cost per part $ 22-00 An outside supplier has offered to sell 22,000 units of part 5-6 each year to Han Products for $20 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 $72,000. However, Han Products has determined that two-thirds of the fixed manufacturing overhead being applied to part 5-6 would continue even if part 5-6 were purchased from the outside supplier. Required: What is the financial impact of accepting the outside supplier's offer? (Indicate negative cash ows with a negative sign.) (See below for hints if you need them.) Financial advantage _
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