managerial accounting

QUESTION 2 (25 Mark! After graduating from Yorkville University with a BBA, you are offered a job at Bombardeer Inc. which makes engines. You were hired directly out ofschool as you have a very good reputation as an honest and starts! student. You never plagiarize or cheat on exams and set a good example for other students with your strong work ethic. Currently, Bombardeer manufactures all parts used in these engines (including starter assemblies). Your friend Sukhdeep, who also went to Yorkville University, (he did not graduate as he rarely attended classes, and had been written up for academic misconduct on several occasions], mrks as a sales representative at Trident Inc. and has Proposed to sell your company starter assemblies that are used in Bombardcer's engines. The starter assemblies are currently manufactured in Plant 7 of Bombardeer Inc. The costs relating to the starter assemblies were as follows: Direct materials 200,000 Variable direct manufacturing labour 600,000 Manufacturing overhead 900,000 Total 2,200,000 Plant 7 manufactured 176,000 starter assemblies. The average cost for each starter assembly is $12.50. You conduct further analysis and discover that 38% of manufacturing overhead is variable. Ofthe xed portion, $300,000 is an allocation of general overhead that will remain unchanged for the company as a whole if production of the starter assemblies is discontinued. A further $250,000 of the xed overhead is avoidable if production of the starter assemblies is discontinued. The balance of the current xed overhead, $100,000, is the division manager's salary. If Bombardeer discontinues production of the starter assemblies, the manager of Plant 7 will be transferred to Plant 2 at the same salary. This move will allow the company to save the $204130 salary that would. otherwise be paid to attract an outsider to this position. You just found out that your friend Sukhdeep had been red from his current job at Trident Inc. as he had continued to behave in an inappropriate manner. He would not show up to work and often mislead his mistomers (as he did his teachers at Yorkville). This conduct was not tolerated at Trident Inc., as this is a very reputable company