-Han Products manufactures 29,000 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 $ 4.40 Direct labor 7.00 Variable manufacturing overhead 2.30 Fixed manufacturing overhead 18.00

Total cost per part $ 31.70

An outside supplier has offered to sell 29,000 units of part S-6 each year to Han Products for $43.00 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 $672,700. 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?

-Delta Company produces a single product. The cost of producing and selling a single unit of this product at the companys normal activity level of 91,200 units per year is:

Direct materials $ 2.00 Direct labor $ 3.00 Variable manufacturing overhead $ .70 Fixed manufacturing overhead $ 4.05 Variable selling and administrative expenses $ 1.20 Fixed selling and administrative expenses $ 2.00

The normal selling price is $20 per unit. The companys capacity is 109,200 units per year. An order has been received from a mail-order house for 1,500 units at a special price of $17.00 per unit. This order would not affect regular sales.

Required:

1.

If the order is accepted, by how much will annual profits be increased or decreased? (The order will not change the companys total fixed costs.)

2.

Assume the company has 500 units of this product left over from last year that are inferior to the current model. The units must be sold through regular channels at reduced prices. What unit cost is relevant for establishing a minimum selling price for these units? (Round your answer to 2 decimal places.)