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 produce and sell one type of carburetor to Troy Engines Ltd. for a cost of $55 per unit. To evaluate this offer, Troy Engines Ltd. has gathered the following information relating to its own cost of producing the carburetor internally: 1. Direct materials cost $34 per unit. 2. Troy Engines pays its direct labour employees $20 per hour, each carburetor requires 30 minutes of labour 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 40% 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. 5. Yearly production of this type of carburetor is 17,000 units. Required: 1-a. Assume that the company has no alternative use for the facilities that are now being used to produce the carburetors. Compute the total differential cost per unit for producing and buying the product. Total differential cost (per unit) in favour of

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 produce and sell one type of carburetor to Troy Engines Ltd. for a cost of $55 per unit. To evaluate this offer. Troy Engines Lid. has gathered the following information relating to its own cost of producing the carburetor internally: 1. Direct materials cost $34 per unit 2. Troy Engines pays its direct labour employees $20 per hour, each carburetor requires 30 minutes of labour 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 40% 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. 5. Yearly production of this type of carburetor is 17,000 units. Required: 1-a. Assume that the company has no alternative use for the facilities that are now being used to produce the carburetors Compute the total differential cost per unit for producing and buying the product 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 produce and sell one type of carburetor to Troy Engines Ltd. for a cost of \$55 per unit. To evaluate this offer. Troy Engines Ltd has gathered the following information relating to its own cost of producing the carburetor internally 1. Direct materials cost $34 per unit 2. Troy Engines pays its direct labour employees $20 per hour; each carburetor requires 30 minutes of labour 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 40% 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. 5. Yearly production of this type of carburetor is 17,000 units. Required: 1-a. Assume that the company has no alternative use for the facilities that are now being used to produce the carburetors Compute the total differential cost per unit for producing and buying the product. Required: 1-a. Assume that the company has no alternative use for the facilities that are now being used to produce the carburetors. Compute the total differential cost per unit for producing and buying the product. 1-b. Should the outside supplier's offer be accepted? Yes: No 2-a. Suppose that if the carburetors were purchased, Troy Engines ud could use the freed capacity to launch a new product. The segment margin of the new product would be $150.000 per year. Compute the total differential cost for producing and buyting the product. Profits have been decreasing for several years at Pegasus Ailines. In an effort to improve the company's performance, consideration is being given to dropping several fights that appear to be unprofitable A typical income statement for one such fight (Fight 482) follows: The following additional informution is avaliable about fight 482 a. Members of the flight crew ore paid fred annual salaries, wheres the fight attendants are paid by the fight 6. One-third of the libbility insurance is a special charge assessed against Fight 482 because, in the opinion of the insurance. company, the destination is in a high risk area. The remaining two thirds would be unaffected by in decisian fo drop Flight 482 c. The bagoage losding and fight preparation expense is an allocation of ground crew's salaies and depreciation of ground equipment Dropping Flight 482 would have no effect on the company s total baggoge loading and fight preparation expenses d If Fight 482 is dropped, Pegasus Airlines has no authorization at present to replace it with another fight. e. Depreciation of aiciaf is due entirely to obsolescence. Depreciation due to wear and tear is negligbie f Oropping Flight 482 would not allow Pegasus Airlines to reduce the number of aircraf in its fieet or the number of fight crew an its payroll! Required: 1. Prepare an analysis showing what impact diopping Fight 482 would have on the aillines profis foo not round intermediate calculations. Negative omounts should be indicated whith a minus sign.) Required: 1. Prepare an analysis showing what impact dropping Flight 482 would have on the airline's profits. (Do not round intermediate calculations. Negative amounts should be indicated with a minus sign.)