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 unitfor part S-6 is as follows:Direct materialsDirect labourVariable overheadFixed overheadTotal cost per partAn 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 acceptsthis offer, the facilities now being used to manufacture part S-6 could be rented to another company at an annual rental of $100,000.However, Han Products has determined that 30% of the fixed overhead being applied to part S-6 will be avoided if part S-6 ispurchased from the outside supplier.$ 5.5011.504.5010.20$31.70Required:1. What is the net dollar advantage or disadvantage of accepting the outside supplier's offer? (Round "Total costs" and final answer tothe nearest whole dollar amount.)Net dollar disadvantage2. What is the annual rental value at which the company will be indifferent between the two options? (Round "Total costs" and finalanswer to the nearest whole dollar amount.)Annual rental value

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Description: 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 unitfor part S-6 is as follows:Direct materialsDirect labourVariable overheadFixed overheadTotal c

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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

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

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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