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Engines, Ltd., for a cost of $20 per unit. To evaluate this offer, Troy Engines, Ltd., has gathered the following information relating to its
Engines, Ltd., for a cost of $20 per unit. To evaluate this offer, Troy Engines, Ltd., has gathered the following information relating to its own cost of producing the carburetor internally: 14,300 Per Units Unit Per Year Direct materials $5 $ 71,500 Direct labor 7 100,100 Variable manufacturing overhead 3 42,900 Fixed manufacturing overhead, traceable 6* 85,800 128,700 Fixed manufacturing overhead, allocated 9 Total cost $30 429,000 es *40% supervisory salaries; 60% depreciation of special equipment (no resale value). Required: 1a. Assuming that the company has no alternative use for the facilities that are now being used to produce the carburetors, compute the total cost of making and buying the parts. (Round your Fixed manufacturing overhead per unit rate to 2 decimals.) Make Buy Total relevant cost (14,300 units) 1b. Should the outside supplier's offer be accepted? O Accept Reject
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