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Han Products manufactures 31,000 units of part 5-6 each year for use on its production line. At this level of activity, the cost per unit
Han Products manufactures 31,000 units of part 5-6 each year for use on its production line. At this level of activity, the cost per unit for part S 6 is $ 3.50 3.00 2.50 Direct saterials Direct lobor Variable manufacturing overhead Fixed manufacturing overhead Total cost per part $ 20.00 An outside supplier has offered to sell 31,000 units of part 5 6 each year to Hon Products for $18 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 $81000 However, Han Products has determined that two-thirds of the fixed manufacturing overhead being applied to part 6 would continue even if part 5-6 were purchased from the outside supplier Required: What is the financial advantage (disadvantage of accepting the outside supplier's other
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