2 Exercise 13-3 (Algo) Make or Buy Decision [LO13-3] 2 points eBook Fant References Troy Engines Limited, manufactures a variety of engines for use in heavy equipment. The company has always produced all of the necessary parts for its engines, including all of the carburetors. An outside supplier has offered to sell one type of carburetor to Troy Engines, Limited, for a cost of $40 per unit. To evaluate this offer. Troy Engines, Limited, has gathered the following information relating to its own cost of producing the carburetor internally: Direct materiale Direct Labor variable manufacturing overhead Fixed sanufacturing overhead, traceable Find manufacturing overhead, allocated Total cost Per 15,000 Units Per Year $225,000 165,000 Unit $15 11 2 30,000 135,000 180,000 $735,000 12 $49 "One-third supervisory salaries: two-thirds depreciation of special equipment (no resale value). Required: 1. Assuming the company has no alternative use for the facilities that are now being used to produce the carburetors, what would be the financial advantage (disadvantage) of buying 15,000 carburetors from the outside supplier? 2. Should the outside supplier's offer be accepted? 3. Suppose that if the carburetors were purchased. Troy Engines, Limited, could use the freed capacity to launch a new product. The segment margin of the new product would be $150,000 per year. Given this new assumption, what would be the financial advantage (disadvantage) of buying 15,000 carburetors from the outside supplier? 4. Given the new assumption in requirement 3, should the outside supplier's offer be accepted? Complete this question by entering your answers in the tabs below. 2 2 points Book References Fixed manufacturing overhead, allocated Total cost 12 $ 49 180,000 $735,000 "One-third supervisory salaries; two-thirds depreciation of special equipment (no resale value). Required: 1. Assuming the company has no alternative use for the facilities that are now being used to produce the carburetors, what would be the financial advantage (disadvantage) of buying 15,000 carburetors from the outside supplier? 2. Should the outside supplier's offer be accepted? 3. Suppose that if the carburetors were purchased, Troy Engines. Limited, could use the freed capacity to launch a new product. The segment margin of the hew product would be $150,000 per year. Given this new assumption, what would be the financial advantage (disadvantage) of buying 15,000 carburetors from the outside supplier? 4. Given the new assumption in requirement 3, should the outside supplier's offer be accepted? Complete this question by entering your answers in the tabs below. Required I Required 2 Required 31 Required 4 Assuming the company has no alternative use for the facilities that are now being used to produce the carburetors, what would be the financial advantage (disadvantage) of buying 15,000 carburetors from the outside supplier? 2. points eBook Hent References 49 $735,000 "One-third supervisory salaries; two-thirds depreciation of special equipment (no resale value). Required: 1. Assuming the company has no alternative use for the facilities that are now being used to produce the carburetors, what would I the financial advantage (disadvantage) of buying 15,000 carburetors from the outside supplier? 2. Should the outside supplier's offer be accepted? 3. Suppose that if the carburetors were purchased. Troy Engines. Limited, could use the freed capacity to launch a new product. T segment margin of the new product would be $150,000 per year. Given this new assumption, what would be the financial advante (disadvantage) of buying 15,000 carburetors from the outside supplier? 4. Given the new assumption in requirement 3, should the outside supplier's offer be accepted? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required's Required 4 Suppose that if the carburetors were purchased, Troy Engines, Limited, could use the freed capacity to launch a new product. The segment margin of the new product would be $150,000 per year. Given this new assumption, what would be the financial advantage (disadvantage) of buying 15,000 carburetors from the outside supplier? < Required 2 Required 4 > 4 2 Donts Exercise 13-12 (Algo) Volume Trade-Off Decisions [LO13-5] Benoit Company produces three products-A, B, and C. Data concerning the three products follow (per unit): Product eflook Selling price $90.00 $ 60,00 $ 80.00 Variable expenses References Direct materials 27.00 18.00 Other variable expenses 27.00 27.00 9.00 47.00 Total variable expenses 54.00 45,00 56.00 Contribution margin $36.00 $15.00 $24.00 Contribution margin ration 40% 25% 30% The company estimates that it can sell 750 units of each product per month. The same raw material is used in each product. The material costs $3 per pound with a maximum of 5,400 pounds available each month. Required: 1. Calculate the contribution margin per pound of the constraining resource for each product. 2. Which orders would you advise the company to accept first, those for A, B, or C? Which orders second? Third? 3. What is the maximum contribution margin that the company can eam per month if it makes optimal use of its 5,400 pounds of materials? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 4 Contribution margin ratio 40% 25% 30% oints eBook References The company estimates that it can sell 750 units of each product per month. The same raw material is used in each product. The material costs $3 per pound with a maximum of 5,400 pounds available each month. Required: 1. Calculate the contribution margin per pound of the constraining resource for each product. 2. Which orders would you advise the company to accept first, those for A, B, or C? Which orders second? Third? 3. What is the maximum contribution margin that the company can eam per month if it makes optimal use of its 5,400 pounds of materials? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Which orders would you advise the company to accept first, those for A, B, or C? Which orders second? Third? Product A Product B Product C 4 Contribution margin Contribution margin ratio 16. 15. 24.00 40% 25% 30% nts ebook ferences The company estimates that it can sell 750 units of each product per month. The same raw material is used in each product. The material costs $3 per pound with a maximum of 5,400 pounds available each month. Required: 1. Calculate the contribution margin per pound of the constraining resource for each product. 2. Which orders would you advise the company to accept first, those for A, B, or C? Which orders second? Third? 3. What is the maximum contribution margin that the company can earn per month if it makes optimal use of its 5,400 pounds of materials? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What is the maximum contribution margin that the company can earn per month if it makes optimal use of its 5,400 pounds of materials? (Round your intermediate calculations to 2 decimal places.) Maximum contribution margin Required 2 Required 3>