Han Products manufactures 70,000 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 as follows: Direct materials Direct labour Variable overhead Fixed overhead Total cost per part $ 7.50 13.50 6.50 11.40 $38.90 An outside supplier has offered to sell 62,500 units of part 5-6 each year to Han Products for $34.00 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 $116,000. However, Han Products has determined that one-third(1/3) of the fixed overhead being applied to part 5-6 will be avoided if part S-6 is purchased from the outside supplier. Required: 1. What is the net dollar advantage or disadvantage of accepting the outside supplier's offer? (Do not round the intermediate calculations. Round your intermediate calculations to two decimal places.) Net dollar advantage $ 2,693,400 2. What is the annual rental value at which the company will be indifferent between the two options? (Do not round the intermediate calculations. Round your intermediate calculations to two decimal places.) Annual rental value Your Retail Store's accountant prepared the following income statement for the ladies' accessories product line: $3,275,000 1,539, 250 1,735,750 Sales Less: Variable expenses Contribution margin Less: Fixed expenses : Wages Insurance on inventory Advertising Net operating income (loss) $1,179,000 65,500 720,500 1,965,000 $ (229,250) Management is concerned about the loss and is considering dropping the product line. If the product line is dropped, a job has to be created elsewhere for a long-term employee currently earning an annual salary of $98,250. Required: Calculate the increase or decrease in the operating income in both alternatives. Keep Accesories Product Line Drop Accesories Product Line Sales Fixed expenses Net operating income (loss) Should the ladies' accessories product line be dropped? Yes O No