O ezto.mheducation.com/hm.tpx?-045457128500414434 153178638476 Han Products manu

Question

O ezto.mheducation.com/hm.tpx?-045457128500414434 153178638476 Han Products manufactures 13,000 units of part S-6 each year for use on ds production line. At this level of activity, the cost per unit for part S-6 is: Direct materials Direct labor Variable manufacturing overhead Fxed manufacturing overhead S 5.00 8.00 2.70 18.00 Total cost per part $ 33.70 An outside supplier has offered to sell 18,000 units of part S-8 each year to Han Products for $47.50 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 $459.400. 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 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 Unit Differential Costs 18,000 Units Make Buy Make Buy Cost of purchasing Cost of making Direct materials Direct labor Variable overhead Fixed overhead Total cost o How much will profts increase or decrease if the outside suppliers offer s accepted? Proft would oy

Explanation / Answer

Per unit differential cost Per unit differential cost 18000 Units 18000 Units make buy Make Buy cost of purchasing 47.5 855000 cost of making direct material 5 90000 direct labor 8 144000 variable manufacturing overheads 2.7 48600 Fixed manufacturing cost traceable 6 0 108000 0 total cost 21.7 47.5 390600 855000 facilities rent 459400 total relevant cost 850000 855000 profit will decrease by (851800-855000) = -3200 if outsider supplier order is accepted -5000

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