Han Products Manufactures 57 500 Units Of Parts 6 Each Year For Use On Its Production Line At This Level Of Activity T 1 (33.06 KiB) Viewed 21 times
Han Products Manufactures 57 500 Units Of Parts 6 Each Year For Use On Its Production Line At This Level Of Activity T 2 (19.88 KiB) Viewed 21 times
Han Products manufactures 57,500 units of parts 6 each year for use on its production line. At this level of activity, the cost per unit for part 5-6 is as follows: Direct materials Direct Labour Variable overhead Fixed overhead Total cost per part $ 6.25 12.25 5.25 10.55 $34.40 An outside supplier has offered to sell 50,500 units of part 5-6 each year to Han Products for $30.25 per part. I Han Products accepts this offer the facilities now being used to manufacture parts 6 could be rented to another company at an annual rental of $106,000 However. Han Products has determined that 30% of the fixed overhead being applied to part S6 will be avoided if parts 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" and final answer to the nearest whole dollar amount.) WWW 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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