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Futura Company purchases the 72,000 starters that it installs in its standard line of farm tractors from a suppiler for the price of $12.60 per unit. Due to a reduction in output, the company now has idle capacity that could be used to produce the starters rather than buying them from an outside suppiler . However, the company's chief engineer is opposed to making the starters because the production cost per unit is $13.00 as shown below. Per Unit Total Direct materials $ 7.00 Direct labor 2.ee 1.60 $ 115,200 $ 180, Bee 1.49 Supervision Depreciation Variable manufacturing overhead Rent 9.60 9.49 $ 28,800 Total product cost $ 13.09 If Futura decides to make the starters, a supervisor would have to be hired (at a salary of $115,200) to oversee production. However, the company has sufficient Idle tools and machinery such that no new equipment would have to be purchased. The rent charge above is based on space utilized in the plant. The total rent on the plant is $81,000 per period. Depreciation is due to obsolescence rather than wear and tear. Required: What is the financial advantage (disadvantage) of making the 72,000 starters Instead of buying them from an outside supplier? Financial advantage $ 38,880 Delta Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 88,800 units per year is: Direct materials $ 2.10 Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses $ 4.00 $ 0.70 $ 4.45 $ 1.20 $ 3.ee The normal selling price is $25.00 per unit. The company's capacity is 117,600 units per year. An order has been received from a mall- order house for 2.400 units at a special price of $22.00 per unit. This order would not affect regular sales or the company's total fixed costs. Required: 1. What is the financial advantage (disadvantage) of accepting the special order? 2. As a separate matter from the special order, assume the company's inventory Includes 1,000 units of this product that were produced last year and that are inferior to the current model. The units must be sold through regular channels at reduced prices. The company does not expect the selling of these inferior units to have any effect on the sales of its current model. What unit cost is relevant for establishing a minimum selling price for the inferior units? Complete this question by entering your answers in the tabs below. Required 1 Required 2 What is the financial advantage (disadvantage) of accepting the special order? Delta Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 88.800 units per year is: Direct materials Direct labor $ 2.10 $ 4.20 $ 0.7e Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses $ 4.45 $ 1.20 $ 3.00 The normal selling price is $25.00 per unit. The company's capacity is 117,600 units per year. An order has been received from a mall- order house for 2.400 units at a special price of $22.00 per unit. This order would not affect regular sales or the company's total fixed costs. Required: 1. What is the financial advantage (disadvantage) of accepting the special order? 2. As a separate matter from the special order, assume the company's inventory includes 1,000 units of this product that were produced last year and that are inferior to the current model. The units must be sold through regular channels at reduced prices. The company does not expect the selling of these Inferior units to have any effect on the sales of its current model. What unit cost is relevant for establishing a minimum selling price for the inferior units? Complete this question by entering your answers in the tabs below. Required 1 Required 2 As a separate matter from the special order, assume the company's inventory includes 1,000 units of this product that were produced last year and that are inferior to the current model. The units must be sold through regular channels at reduced prices. The company does not expect the selling of these inferior units to have any effect on the sales of its current model. What unit cost is relevant for establishing a minimum selling price for the inferior units? (Round your answer to 2 decimal places.) Show less Relevant cost per unit 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 $40 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 18, eee Per Units Unit Per Year $ 18 $ 324,080 9 162,800 2 36,900 99 162,00 12 216,800 Direct labor Variable manufacturing overhead Fixed manufacturing overhead, traceable Fixed manufacturing overhead, allocated Total cost $50 $ 900,000 *One-third supervisory salaries, two-thirds depreciation of special equipment (no resale value). Required: 1. Assuming the company has no alternative use for the facilities that are now being used to produce the carburetors, what would be the financial advantage (disadvantage) of buying 18,000 carburetors from the outside supplier? 2 Should the outside supplier's offer be accepted? 3. 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 $180,000 per year. Given this new assumption, what would be the financial advantage (disadvantage) of buying 18,000 carburetors from the outside supplier? 4. Given the new assumption in requirement 3, should the outside suppiler's offer be accepted? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Assuming the company has no alternative use for the facilities that are now being used to produce the carburetors, what would be the financial advantage (disadvantage) of buying 18,000 carburetors from the outside supplier? Financial (disadvantage) $ (162,000) Required Required 2 > Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 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 $180,000 per year. Given this new assumption, what would be the financial advantage (disadvantage) of buying 18,000 carburetors from the outside supplier? Financial advantage Required 2 Required 4 >