Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Troy engines limited manufactures a variety of engines for use in heavy equipment the company has always produced all of the parts for its engines

Troy engines limited manufactures a variety of engines for use in heavy equipment the company has always produced all of the parts for its engines including thr carbuetors an outside supplier offered to sell one typ of carburetor to troy engines limited for a cost of$36 per unit to evalute this off troy engines limited summarized the cost of producing the carburetor internally as follows direct materials17 per unit 20000 units per year 340000 direct labor 10200000 per unit variable manufacturing overhead 240000 per unit fix manufacturing overhead traceable 9*180000 per unit fix manufacturing overhead allocated 12240000 per unit total cost 501000000 per unit *one third supervisory salaries two thirds depreciation of special equipment no resale value required (1) if the company has no alternative use for the facilities being used to produce the carburetors what would be the financial advantage (disadvantage if buying 20000 carburetors from the outside supplier (2) suppose if the carbuetors were purchased troy engines limited could use the freed capacity to launch a new product with a segment margin of 200000 per year given this new assumption what would be the financial advantage (disadvantsge) of buying 20000 caburetors from the outside supplier

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

Step: 3

blur-text-image

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

Evaluating The Effectiveness On Internal Audit Departments

Authors: Dereje Ferede Asrat, Sewale Abate Ayalew

1st Edition

3659298387, 978-3659298387

More Books

Students also viewed these Accounting questions