Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Troy Engines, Ltd, manufactures a varlety of engines for use in heavy equipment. The company has always produced all of the necessary parts for its

image text in transcribed

Troy Engines, Ltd, manufactures a varlety 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 $34 per unit To evaluate this offer, Troy Engines, Ltd., has gathered the following informotion relating to its own cost of producing the carburetor internally Per Units Unit Per Year Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead, traceable Fixed manufacturing overhead, allocated Total cost 14 294, 000 12 252,000 42,000 9189,000 252, 000 12 6 49 1,029,000 '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 edvantage (disedvantage) of buying 21,000 carburetors from the outside supplier? 2. Should the outside supplier's offer be accepted? 3. Suppose that if the corburetors were purchased, Troy Engines. Ltd, could use the freed capacity to launch a new product. The segment margin of the new product would be $210,000 per year Given this new assumption, what would be financial advantage (disadvantage) of buying 21000 carburetors from the outside supplier? 4. Given the new ossumption in requirement 3, should the outside supplier's offer be accepted

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

Essentials Of Cost Accounting For Health Care Organizations

Authors: Steven A. Finkler

1st Edition

0834205289, 978-0834205284

More Books

Students also viewed these Accounting questions

Question

3 > O Actual direct-labour hours Standard direct-labour hours...

Answered: 1 week ago

Question

Describe the major barriers to the use of positive reinforcement.

Answered: 1 week ago