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    Han Products currently manufactures 30,000 units of part S-6 per year at a total cost of $25 per unit. An outside supplier has offered to sell the same number of units for $21 each. If Han Products accepts this offer, they could rent the freed-up facilities for $80,000 per year, but two-thirds of the fixed overhead for part S-6 would remain.

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    Han Products currently manufactures 30,000 units of part S-6 per year at a total cost of $25 per unit. An outside supplier has offered to sell the same number of units for $21 each. If Han Products accepts this offer, they could rent the freed-up facilities for $80,000 per year, but two-thirds of the fixed overhead for part S-6 would remain.

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    18 views1 page

    For Scribd

    Uploaded by

    Winnie Yannie Calantog
    Han Products currently manufactures 30,000 units of part S-6 per year at a total cost of $25 per unit. An outside supplier has offered to sell the same number of units for $21 each. If Han Products accepts this offer, they could rent the freed-up facilities for $80,000 per year, but two-thirds of the fixed overhead for part S-6 would remain.

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    1. Products manufactures 30,000 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 labor Variable manufacturing overhead Fixed manufacturing overhead Total cost per part P 3.60 P10.00 P 2.40 P 9.00 P25.00

    An outside supplier has offered to sell 30,000 units of part S-6 each year to Han Products for P21 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 P80,000. 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.

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