Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please solve with explanation Troy Engines Ltd. manufactures a variety of engines for use in heavy equipment. The company has always produced all of the

image text in transcribed

image text in transcribed

please solve with explanation

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 produce and sell one type of carburetor to Troy Engines Ltd. for a cost of $51.0 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 labour Variable manufacturing overhead Fixed manufacturing overhead, traceable Fixed manufacturing overhead, allocated Per 21,000 Units Unit per Year $ 16 $ 336,000 14 294,000 7 147,000 12.0* 252,000 13 273,000 Total cost $62.0 $1,302,000 *One-third supervisory salaries two-thirds depreciation of special equipment (no resale value) Required: 1-a. Compute the total differential cost per unit for producing and buying the product. (Round your answers to 1 decimal places.) Make Buy Total differential cost (per unit) 1-b. Should the outside supplier's offer be accepted? Yes 2-a. 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 $280,000 per year. Compute the total differential cost in producing and buying the product when the segment margin is foregone on a potential new product line. Make Total differential cost 2-b. Should Troy Engines Ltdaccept the offer to buy the carburetors for $51.0 per unit? Yes O No

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_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