Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

es Troy Engines, Limited, manufactures a variety of engines for use in heavy equipment. The company has always produced all of the parts for

image

es Troy Engines, Limited, manufactures a variety of engines for use in heavy equipment. The company has always produced all of the parts for its engines, including the carburetors. An outside supplier offered to sell one type of carburetor to Troy Engines, Limited, for a cost of $35 per unit. To evaluate this offer, Troy Engines, Limited, summarized the cost of producing the carburetor internally as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead, traceable Fixed manufacturing overhead, allocated Total cost Per 20,000 Units Per Unit $ 17 11 3 Year $ 340,000 220,000 60,000 3* 60,000 6 120,000 $ 40 $ 800,000 "One-third supervisory salaries; two-thirds depreciation of special equipment (no resale value). Required: 1. If the company has no alternative use for the facilities being used to produce the carburetors, what would be the financial advantage (disadvantage) of buying 20,000 carburetors from the outside supplier? 2. Should the outside supplier's offer be accepted? 3. Suppose if the carburetors were purchased, Troy Engines, Limited, could use the freed capacity to launch a new product with a segment margin of $200,000 per year. Given this new assumption, what would be the financial advantage (disadvantage) of buying 20,000 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 3 Required 4 D Given the new assumption in requirement 3, should the outside supplier's offer be accepted?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

Answer Here are the answers to the questions Required 1 If the company has no alternative use for th... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting

Authors: Ray Garrison, Eric Noreen, Peter Brewer

16th edition

1259307417, 978-1260153132, 1260153134, 978-1259307416

More Books

Students also viewed these Accounting questions

Question

Explain the steps involved in training programmes.

Answered: 1 week ago

Question

Name four commonly used Protocol in the Network access layer?

Answered: 1 week ago

Question

How do direct labor costs flow through a job-order costing system?

Answered: 1 week ago

Question

=+What is the probability they choose all women?

Answered: 1 week ago