(Solved):Han Products manufactures 27,000 units of part S-6 each year for use on its production line. At…

 

Question

Han Products manufactures 27,000 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 $3.50
Direct labor 10.00
Variable manufacturing overhead 2.50
Fixed manufacturing overhead 12.00
Total cost per part $28.00

An outside supplier has offered to sell 27,000 units of part S-6 each year to Han Products for $22 per part. If Han

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