Han Products manufactures 50,000 units of part S-6 each year fo for part S-6 is as follows: Direct materials Direct labour Variable overhead Fixed overhead Total cost per part $ 5.50 11.50 4.50 10.20 $31.70
Han Products manufactures 50,000 units of part S-6 each year fo for part S-6 is as follows: Direct materials Direct labour Variable overhead Fixed overhead Total cost per part $ 5.50 11.50 4.50 10.20 $31.70
Chapter10: Short-term Decision Making
Section: Chapter Questions
Problem 6PA: Gent Designs requires three units of part A for every unit of Al that it produces. Currently, part A...
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The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Subject: acounting
![Han Products manufactures 50,000 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 as follows:
Direct materials
Direct labour
Variable overhead
Fixed overhead
Total cost per part
An outside supplier has offered to sell 43,500 units of part S-6 each year to Han Products for $28.00 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 $100,000.
However, Han Products has determined that 30% of the fixed overhead being applied to part S-6 will be avoided if part S-6 is
purchased from the outside supplier.
$ 5.50
11.50
4.50
10.20
$31.70
Required:
1. What is the net dollar advantage or disadvantage of accepting the outside supplier's offer? (Round "Total costs" and final answer to
the nearest whole dollar amount.)
Net dollar disadvantage
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 dollar amount.)
Annual rental value](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F472621be-5969-4a54-b52e-f83201e6e65c%2F67ec0180-3e8c-4555-96ca-c7472ee27654%2Fn8rradn_processed.png&w=3840&q=75)
Transcribed Image Text:Han Products manufactures 50,000 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 as follows:
Direct materials
Direct labour
Variable overhead
Fixed overhead
Total cost per part
An outside supplier has offered to sell 43,500 units of part S-6 each year to Han Products for $28.00 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 $100,000.
However, Han Products has determined that 30% of the fixed overhead being applied to part S-6 will be avoided if part S-6 is
purchased from the outside supplier.
$ 5.50
11.50
4.50
10.20
$31.70
Required:
1. What is the net dollar advantage or disadvantage of accepting the outside supplier's offer? (Round "Total costs" and final answer to
the nearest whole dollar amount.)
Net dollar disadvantage
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 dollar amount.)
Annual rental value
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