(Solution Download) Han Products manufactures 25,000 units of part S-6 each year for use on its production line. At this

 Han Products manufactures 25,000 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:

 Direct materials \$ 5.20 Direct labor 8.00 Variable manufacturing overhead 3.70 Fixed manufacturing overhead 12.00 Total cost per part \$ 28.90

 An outside supplier has offered to sell 25,000 units of part S-6 each year to Han Products for \$46.00 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 \$632,500. However, Han Products has determined that two-thirds of the fixed manufacturing overhead being applied to part S-6 would continue even if part S-6 were purchased from the outside supplier.

 Required:

a.

Calculate the per unit and total relevant cost for buying and

decimal places.)

 Per Unit Differential Costs Make Per Unit Differential costs buys 25,000 Units Makes 25,000 units buy Cost of Purchasing Cost of Making: Direct Material: Direct Labor: Variable Overhead: Fixed Overhead: Total Cost

 b. How much will profits increase or decrease if the outside supplierAc??cs offer is accepted?

Profit would _______ by ___________.

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