Han Products manufactures 40,000 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 as follows:

Direct materials$4.50Direct labour10.50Variable overhead3.50Fixed overhead9.60Total cost per part$28.10

An outside supplier has offered to sell 36,000 units of part S-6 each year to Han Products for $25.00 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 $92,000. However, Han Products has determined that 30% of the fixed overhead being applied to part S-6 will be avoided if part S-6 is purchased from the outside supplier.