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Han Products manufactures 40,000 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 40,000 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: Direct materials Direct labor Variable manufacturing overhead Pixed manufacturing overhead Total cost per part $ 3.30 12.00 2.70 6.00 $ 24.00 An outside supplier has offered to sell 40,000 units of part 5-6 each year to Han Products for $22 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 $90,000 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 advantage (disadvantage) of accepting the outside suppler's offer
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