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this omes, Trey tingines Ltd. has gathered the following information relating to its cost of produsited 15.000 cwrhurvors: 1. Dirce materials cose $14 per unit.

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this omes, Trey tingines Ltd. has gathered the following information relating to its cost of produsited 15.000 cwrhurvors: 1. Dirce materials cose $14 per unit. 2. They Eingines pays its direct labour employees $20 per hour; each carburetor requires 30 minutes of habour time. 3. Variable manufacturing overhead is allocated at 30% of direct labour cost. 4. Total fixed manufacturing cost amounts to $15 per unit, of which 60% is allocated common cost and the remaining 405 covers depreciation of special equipment and supervisory salaries. The special equipment has no resale value. Supervisory personnel will be transferred to a different department if the company decides to purchase the carburetor from the outside supplier. Pequired: 1. Assuming that the company has no alternative use for the facilities that are now being used to produce the carburetors, should the outside supplier's offer be accepted? Show all computations. 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 $150,000 per year. Should Troy Engines Ltd. accept the offer to buy the carburetors for $35 per unit? Show all computations. this omes, Trey tingines Ltd. has gathered the following information relating to its cost of produsited 15.000 cwrhurvors: 1. Dirce materials cose $14 per unit. 2. They Eingines pays its direct labour employees $20 per hour; each carburetor requires 30 minutes of habour time. 3. Variable manufacturing overhead is allocated at 30% of direct labour cost. 4. Total fixed manufacturing cost amounts to $15 per unit, of which 60% is allocated common cost and the remaining 405 covers depreciation of special equipment and supervisory salaries. The special equipment has no resale value. Supervisory personnel will be transferred to a different department if the company decides to purchase the carburetor from the outside supplier. Pequired: 1. Assuming that the company has no alternative use for the facilities that are now being used to produce the carburetors, should the outside supplier's offer be accepted? Show all computations. 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 $150,000 per year. Should Troy Engines Ltd. accept the offer to buy the carburetors for $35 per unit? Show all computations

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