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Han Products manufactures 24,000 units of part S-6 each year for use on its production line. At this level of activity, the cost per unit
Han Products manufactures 24,000 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:
Exercise 7-11 Make or Buy a Component LLO7-3] Han Products manufactures 24,000 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: 4.40 Direct materials 7.00 Direct labor Variable manufacturing overhead 3.90 Fixed manufacturing overhead 15.00 30,30 Total cost per part An outside supplier has offered to sell 24,000 units of part S-6 each year to Han Products for$44.00 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 $583,800. 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. Required: 1. 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 24,000 Units Costs Make Buy Make Buy Cost of purchasing Cost of making: Direct materials Direct labor Variable overhead Fixed overhead Total costStep by Step Solution
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