Exercise 13-11 (Algo) Make or Buy Decision (L013-3) Han Products manufactures 27,000 units of part 5-6 each year for use on its production line. At this level of activity, the cost per unit for parts 6ts: Direct materials Direct lobor Variable manufacturing overhead Fixed manufacturing overhead Total cost per part $ 3.50 10.00 2.50 12.00 $28.00 An outside supplier has offered to sell 27,000 units of parts 6 each year to Han Products for $22 per part. If Han Products accepts this offer, the facilities now being used to manufacture parts 6 could be rented to another company at an annual rental of $77000 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 supplier's offer? Exercise 13-10 (Algo) Make or Buy Decision [LO13-3) Futura Company purchases the 63,000 starters that it installs in its standard line of farm tractors from a supplier for the price of $10.10 per unit. Due to a reduction in output, the company now has idie capacity that could be used to produce the starters rather than buying them from an outside supplier . However the company's chief engineer is opposed to making the starters because the production cost per unit is $10.90 as shown below: Total Direct material Direct labor Supervision Depreciation Variable manufacturing overhead Hent total product cost Per Unit $ 4.00 3.20 1.50 1.30 0.40 8.50 $10.00 $ 94,500 $ 81,900 $ 11,500 u Futura decides to make the starters, a supervisor would have to be hired (at a salary of $94,500) to oversee production. However the company has sufficient idle tools and machinery such that no new equipment would have to be purchased. The rent charge above is based on space utilized in the plant. The total rent on the plant is $87.000 per period. Depreciation is due to obsolescence rather than wear and tear Required: What is the financial advantage (disadvantage) of making the 63.000 starters instead of buying them from an outside supplier