Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Hello, I'm having problems calculating make and buy. Would someone be able to help with the attached problem? Thank you, Don Vic Troy Engines, Ltd.,

Hello,

I'm having problems calculating make and buy. Would someone be able to help with the attached problem?

Thank you,

Don Vic

image text in transcribed Troy Engines, Ltd., 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, Ltd., for a cost of $24 per unit. To evaluate this offer, Troy Engines, Ltd., has gathered the following information relating to its own cost of producing the carburetor internally: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead, traceable Fixed manufacturing overhead, allocated Total cost Per Unit $ 5 7 4 9* 9 $ 34 14,500 Units Per Year $ 72,500 101,500 58,000 130,500 130,500 $ 493,000 *40% supervisory salaries; 60% depreciation of special equipment (no resale value). Required: 1. 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.) Total Relevant Cost (14,500 units) Make: ? Buy: $348,000 2. Suppose that if the carburetors were purchased, Troy Engines, Ltd., could use the freed capacity to launch a new product. The segment margin of the new product would be $82,800 per year. Compute the total cost of making and buying the parts. (Round your Fixed manufacturing overhead per unit rate to 2 decimals.) Total Relevant Cost (14,500) Make: ? Buy

Step by Step Solution

There are 3 Steps involved in it

Step: 1

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

Step: 3

blur-text-image

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

Cost Accounting Principles And Applications

Authors: Horace Brock, Linda Herrington, La Vonda Ramey

7th Edition

0071115609, 978-0071115605

More Books

Students also viewed these Accounting questions

Question

Once you have a job, what steps can you take to be successful?

Answered: 1 week ago

Question

=+23. Advertising strategies EVPI.

Answered: 1 week ago

Question

2. Find five metaphors for communication.

Answered: 1 week ago