Han Products manufactures 30,000 units of part S-6 each year for use on its productionline. At this level of activity, the cost per unit for part S-6 is:Direct materials$ 5.10Direct labor7.00Variable manufacturingoverhead2.40Fixed manufacturing18.00overhead32.50Total cost per partAn outside supplier has offered to sell 30,000 units of part S-6 each year to HanProducts for $46.50 per part. If Han Products accepts this offer, the facilities now beingused to manufacture part S-6 could be rented to another company at an annual rental of$767,000. However, Han Products has determined that two-thirds of the fixedmanufacturing overhead being applied to part S-6 would continue even if part S-6 werepurchased from the outside supplier. Required:a. Calculate the per unit and total relevant cost for buying and making the product?(Round your "per unit" answers to 2 decimal places.)Per UnitDifferential Costs30,000 UnitsMakeBuyMakeBuyCost of purchasingCost of making:Direct materialsDirect laborVariable overheadFixed overheadTotal cost$ 0.00 $ 0.00 $b. How much will profits increase or decrease if the outside supplier's offer is accepted?Profit wouldby

a. Compute per unit and total relevant cost for buying and making the product as shown below:…

Answered: Han Products manufactures 30,000 units…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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