es Exercise 11-11 (Algo) Make or Buy Decision [LO11-3] Han Products manufactures 28,000 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 Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total cost per part $ 3.60 11.00 2.40 6.00 $ 23.00 An outside supplier has offered to sell 28,000 units of part S-6 each year to Han Products for $21 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 $78,000. 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: What is the financial advantage (disadvantage) of accepting the outside supplier's offer? < Prev 5 of 8 www Next >
es Exercise 11-11 (Algo) Make or Buy Decision [LO11-3] Han Products manufactures 28,000 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 Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total cost per part $ 3.60 11.00 2.40 6.00 $ 23.00 An outside supplier has offered to sell 28,000 units of part S-6 each year to Han Products for $21 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 $78,000. 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: What is the financial advantage (disadvantage) of accepting the outside supplier's offer? < Prev 5 of 8 www Next >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![es
Exercise 11-11 (Algo) Make or Buy Decision [LO11-3]
Han Products manufactures 28,000 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
Direct labor
Variable manufacturing overhead
Fixed manufacturing overhead
Total cost per part
$ 3.60
11.00
2.40
6.00
$23.00
An outside supplier has offered to sell 28,000 units of part S-6 each year to Han Products for $21 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 $78,000. 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:
What is the financial advantage (disadvantage) of accepting the outside supplier's offer?
< Prev
5 of 8
‒‒‒
www
Next >](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe9583b3e-6ff6-40fa-a6f7-68d8d6061725%2F28e44a31-dafe-44b8-bc1b-8c142866fff5%2Fqlt8xpq_processed.jpeg&w=3840&q=75)
Transcribed Image Text:es
Exercise 11-11 (Algo) Make or Buy Decision [LO11-3]
Han Products manufactures 28,000 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
Direct labor
Variable manufacturing overhead
Fixed manufacturing overhead
Total cost per part
$ 3.60
11.00
2.40
6.00
$23.00
An outside supplier has offered to sell 28,000 units of part S-6 each year to Han Products for $21 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 $78,000. 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:
What is the financial advantage (disadvantage) of accepting the outside supplier's offer?
< Prev
5 of 8
‒‒‒
www
Next >
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