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Han Products manufactures 26,000 units of part S-6 each year for use on its production line. At this level of Direct materials Direct labor Variable
Han Products manufactures 26,000 units of part S-6 each year for use on its production line. At this level of Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead $4.30 7.00 4.00 9.00 Total cost per part $24.30 An outside supplier has offered to sell 26,000 units of part S-6 each year to Han Products for $46.50 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 $748,200. 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
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