Additional Information: Direct materials 500000Variable direct manufacturing labour 200000Manufacturing overhead 650000Total 1350000Required : 1. ?Electronics, a reliable? supplier, has offered to supply? starter-assembly units at $ 8 per unit. Because this price is less than the current average cost of $ 9 per? unit, the? vice-president of manufacturing is eager to accept this offer. On the basis of financial considerations? alone, should Denver Engineering accept the outside? offer? Show your calculations. ?(?Hint: Production output in the coming year may be different from production output in the past? year.)2.?How, if at? all, would your response to requirement 1 change if the company could use the vacated plant space for storage? and, in so? doing, $110000 avoid of outside storage charges currently? incurred? Why is this information relevant or? irrelevant?

Points: 0 of 16 Save Denver Engineering manufactures small engines that it sells to manufacturers who install them in products such as lawn mowers. The company currently manufactures all the parts used in these engines but is considering a proposal from an external supplier who wishes to supply the starter assemblies used in these engines. The starter assemblies are currently manufactured in Division 3 of Denver Engineering. The costs relating to the starter assemblies for the past 12 months were as follows (Click the icon to view the costs.) Over the past year, Division 3 manufactured 150,000 starter assemblies, The average cost for each starter assembly is $9 ($1,350,000/150 000) Further analysis of manufacturing overhead revealed the following information. Of the total manufacturing overhead, only 25% is considered variable, Off the fixed portion, $243,750 is an alocation of general overhead that will remain unchanged for the company as a whole if production of the starter assemblies is discontinued A further $162 500 of the fixed overhead is available if production of the starter assemblies is discontinued. The balance of the current fixed overhead, $81,250, is the division manager's salary IN Denver Engineering discontinues production of the starter assemblies, the manager of Division 3 will be transferred to Division 2 at the same salary. This move will allow the company to save the 560 060 salary that would otherwise be paid to attract an outsider to this position Required Requirement 1. Toronto Electronics, a reliable supplier, has offered to supply starter-assembly units at $8 per unit, Because this price is less than the current average cast of $9 per unit, the vice-president of manufacturing is eager to accept this offer On the basis of financial considerations alone, should Denver Engineering accept the outside offer ? Show your calculations, (Hint: Production output in the coming year may be different from production output in the past year ) (Round the wartable cusis per unit to the nearest cent Leave unused cells blank ) All Data Relevant Data Alternative 1: Make Alternative 2: Buy Alternative 1: Make Alternative 2 Dep Variable direct materials Variable direct manufacturing labour