Troy Engines, Limited, manufactures a variety of engines for use in heavy equipment. The company has...
Fantastic news! We've Found the answer you've been seeking!
Question:
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/05/66562ab2c075f_05866562ab2ba659.jpg)
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/05/66562ab358d94_05966562ab34b596.jpg)
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/05/66562ab3a61f3_05966562ab39bb32.jpg)
Transcribed Image Text:
Troy Engines, Limited, 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, Limited, for a cost of $35 per unit. To evaluate this offer, Troy Engines, Limited, has gathered the following information relating to its own cost of producing the carburetor internally: 15,000 Units Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead, traceable Fixed manufacturing overhead, allocated Total cost Per Unit Per Year $ 14 $210,000 10 150,000 3 45,000 90,000 9 135,000 $42 $630,000 "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 15,000 carburetors from the outside supplier? 2. Should the outside supplier's offer be accepted? 3. Suppose that if the carburetors were purchased, Troy Engines, Limited, could use the freed capacity to launch a new product. The segment margin of the new product would be $150,000 per year. Given this new assumption, what would be the financial advantage (disadvantage) of buying 15,000 carburetors from the outside supplier? 4. Given the new assumption in requirement 3, should the outside supplier's offer be accepted? Troy Engines, Limited, 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, Limited, for a cost of $35 per unit. To evaluate this offer, Troy Engines, Limited, has gathered the following information relating to its own cost of producing the carburetor internally: 15,000 Units Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead, traceable Fixed manufacturing overhead, allocated Total cost Per Unit Per Year $ 14 $210,000 10 150,000 3 45,000 90,000 9 135,000 $42 $630,000 "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 15,000 carburetors from the outside supplier? 2. Should the outside supplier's offer be accepted? 3. Suppose that if the carburetors were purchased, Troy Engines, Limited, could use the freed capacity to launch a new product. The segment margin of the new product would be $150,000 per year. Given this new assumption, what would be the financial advantage (disadvantage) of buying 15,000 carburetors from the outside supplier? 4. Given the new assumption in requirement 3, should the outside supplier's offer be accepted?
Expert Answer:
Posted Date:
Students also viewed these accounting questions
-
Daniel Mason and Srini Kumar, with capital balances of $34,000 and $36,000, respectively, decide to liquidate their partnership. After selling the noncash assets and paying the liabilities, there is...
-
Tully Taylor established Tullys Phone App Productions in 2024 and kept her accounting records on a cash basis. During 2026, Tully decided to switch her accounting to the accrual basis and has asked...
-
Calculate the 3rd and 6th deciles of the accompanying data. 7 18 12 17 29 18 4 27 30 2 4 10 21 5 8
-
Assume that OMalley Corp. in Exercise 16 uses the FIFO method of process costing. a. What are the equivalent units of production for direct material? b. What are the equivalent units of production...
-
The three primary options for what to evaluate in performance appraisals are traits, behaviors, and results. What are the pros and cons of measuring each of these options? As a manager, which option...
-
Dark Sky Manufacturing (DSM) installed a computerized machine in its factory at a cost of $400,000 on July 1, 2023. The machine has an estimated useful life of five years or a total of 200,000 units...
-
Investigate the file search facility on your computer. Which type of search method do you think it uses? Why do you think this partic ular search method was chosen? What problems could this approach...
-
Refer to the information for Boxer Corporation in PA3-1. Required: Complete all requirements for PA3-1 using the FIFO method. Data from PA3-1 Boxer Corporation manufactures metal toolboxes. It adds...
-
Seemore Company makes camping lanterns using a single production process. All direct materials are added at the beginning of the manufacturing process. Information for the month of March follows:...
-
Boxer Corporation manufactures metal toolboxes. It adds all materials at the beginning of the manufacturing process. The company has provided the following information: Required: 1. Using the...
-
Suppose that the file input.txt contains the two strings F and F. What does the following command do (see EXERCISE 1.2.35)? % java Dragon
-
Which branch of economics focuses on large scale phenomena, such ass, inflation, unemployment, and economic growth
-
(Appendix) Josie Galvez is a college student with a food budget of $120 per month. She wants to get a certain level of nutritional benefits from the food she buys. The following table lists the foods...
-
(Outsourcing) Modern Building Systems manufactures steel buildings for agricultural and commercial applications. Currently, it is trying to decide be tween two alternatives regarding a major overhead...
-
Asset replacement) Northern Plains Energy Company provides electrical ser vices to several rural counties in Nebraska and South Dakota. Its efficiency has been greatly affected by changes in...
![Mobile App Logo](https://dsd5zvtm8ll6.cloudfront.net/includes/images/mobile/finalLogo.png)
Study smarter with the SolutionInn App