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Xian Products manufactures 27,500 units of part S-6 each year for use on its production line. At this level of activity, the cost per unit
Xian Products manufactures 27,500 units of part S-6 each year for use on its production line. At this level of activity, the cost per unit for part S6 is as follows: An outside supplier has offered to sell 24,000 units of part S.6 each year to Han Products for $2125 per part If Xian 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 $82,000 However, Xian Products has determined that 30% of the fixed overhead being applied to part S-6 will be ayoided 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? (Round "Total costs" ond final answer to the nearest whole dollar amount.) 2. What is the annual rental value at which the company will be indifferent between the two options? (Round "Total costs" and final answer to the nearest whole dollor omount.)
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