Tro necessary parts for its engines, Including all of the carburetors. An outside supplier has offered to sell one iype of carburetor to T Engines, Ltd, for a cost of $35 per unit. To evaluate this offer, Troy Engines, Ltd, has gathered tne following information relating to s own cost of producing the carburetor internally manufactures a variety of engines for use in heavy equipment. The c has always produced all of the 16,000 Per Units Unit Per Year Direct materials Direct Labor Variable manufacturing overhead Fixed manufacturing overhead, traceable Fixed manufacturing overhead, allocated Total cost s 16 256,009 3 48,68 $48 640,800 12 192,6 48,000 96,000 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 16,000 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 $160,000 per year. Given this new assumption, what would be financial advantage (disadvantage) of buying 16,000 carburetors from the outside supplier? 4. Given the new assumption in requirement 3, should the outside supplier's offer be accepted Complete this question by entering your answers in the tabs below Required 1 Required 2Required 3 Required 4 Assuming the company has no alternative use for the facilities that are now being used to produce the would be the financial advantage (disadvantage) of buying 16,000 carburetors from the outside supplier? Required 2 Financial (disadvantage) Financial advantage Prey 2of6 Next 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 $35 per unit. To evaluate this offer, Troy Engines, Ltd, has gathered the following information relating to s own cost of producing the carburetor internally 16,800 Units Per Unit Per Year $ 16 $ 256,000 12 192,000 3 48,000 3 48,000 96,000 Direct materials Direct labor Variable manufacturing overhead Fixed nanufacturing overhead, traceable Fixed manufacturing overhead, allocated Total cost $ 40 640,000 "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 16,000 carburetors from the outside supplier? 2. Should the outside supplier's offer be accepted? 3. Suppose that f 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 $160,000 per year. Given this new assumption, what would be financial advantage (disadvantage) of buying 16,000 carburetors from the outside supplier? 4. Given the new assumption in requirement 3, should the outside supplier's offer be accepted? Complete this question by entering your answers in the tabs below. Required 1Required 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 $160,000 per year. Given this new assumption, what would be financial advantage (disadvantage) of buying 16,000 carburetors from the outside supplier? Required 2 Required 4
