Troy Engines, Ltd., manufactures a variety of engines for use in heavy equ pment. 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 carboretor to Troy Engines. Ltd. for a cost of $33 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 nater is Direct labor Variable manufacturing overhead Fixed aufacturint overhead. traceable Fixed hanut acturing overhead allocated Total deat Per Uzut $ 15 9 4 6. 9 $.43 18.000 Unit: Por Year $ 270.000 162,000 72.000 108.000 162.000 $ 774.000 "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 18,000 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 $180,000 per year Given this new assumption, what would be the financial advantage (disadvantage) or buying 18.000 carburetors from the outside supplier? 4. Given the new assumption in requirement 3, should the outside supplier's offer be accepted? wa Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 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 18,000 carburetors from the outside supplier Required 2 > Fixed manufacturing overhead traceable Fixed aanufacturing overhead allocated Total cost 6 9 $.43 722008 108.000 162.000 $ 774.000 "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 the financial advantage (disadvantage) of buying 18.000 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 produc segment margin of the new product would be $180,000 per year. Given this new assumption, what would be the financial a (disadvantage) of buying 18,000 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 2 Required 3 Required 4 Should the outside supplier's offer be accepted? Yes ONO Prey 3 of 6 Next Direct materials Direct labor Variable nanu scturing overhead Fixed manufacturing overhead traceable Fixed rufacturing overhead allocated Total cost Per Unat 315 9 4 69 18.000 Units Pet Year $ 270.000 162.000 72.000 108,000 162,000 $774,000 8.43 "One-third supervisory salanes, 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 woul the financial advantage (disadvantage) of buying 18,000 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 $180,000 per year. Given this new assumption, what would be the financial advan (disadvantage) of buying 18,000 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 2 Required 3 Required 4 Given the new assumption in requirement 3, should the outside supplier's offer be accepted? OYes ON
