Business, 20.06.2020 20:57 nuttyg3705

Exercise 11-11 Make or Buy Decision [LO11-3]Han Products manufactures 21,000 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$3.50Direct labor 9.00Variable manufacturing overhead 2.50Fixed manufacturing overhead 9.00Total cost per part$24.00 An outside supplier has offered to sell 21,000 units of part S-6 each year to Han Products for $20 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 $71,000. 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?

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Exercise 11-11 Make or Buy Decision [LO11-3]Han Products manufactures 21,000 units of part S-6 each...

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