Waterway Engine Incorporated produces engines for the watercraft industry An outside manufacturer has offered to supply several component parts used in the engine assemblies, which are currently being produced by Waterway The supplier will charge Waterway $285 per engine for the set of parts Waterways current costs for those part sets are direct materials, $145 direct labor, $80 and manufacturing overhead applied at 100 of direct labor Variable manufacturing overhead is considered to be 20 of the total, and fixed overhead will not change if the part sets are acquired from the outside supplier Required What would be the net cost advantage or disadvantage if Waterway decided to purchase the parts Should Waterway Engine continue to make the part sets or accept the offer to purchase them for $285 Waterway Engine Incorporated produces engines for the watercraft industry An outside manufacturer has offered to supply several component parts used in the engine assemblies, which are currently being produced by Waterway The supplier will charge Waterway $285 per engine for the set of parts Waterway's current costs for those part sets are direct materials, $145 direct labor, $80 and manufacturing overhead applied at 100 of direct labor Variable manufacturing overhead is considered to be 20 of the total, and fixed overhead will not change if the part sets are acquired from the outside supplier Required a What would be the net cost advantage or disadvantage if Waterway decided to purchase the parts b Should Waterway Engine continue to make the part sets or accept the offer to purchase them for $285

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Waterway Engine Incorporated produces engines for the watercraft industry. An outside manufacturer has offered to supply several component parts used in the engine assemblies, which

Waterway Engine Incorporated produces engines for the watercraft industry. An outside manufacturer has offered to supply several component parts used in the engine assemblies, which are currently being produced by Waterway. The supplier will charge Waterway $285 per engine for the set of parts. Waterways current costs for those part sets are direct materials, $145; direct labor, $80; and manufacturing overhead applied at 100% of direct labor. Variable manufacturing overhead is considered to be 20% of the total, and fixed overhead will not change if the part sets are acquired from the outside supplier.

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What would be the net cost advantage or disadvantage if Waterway decided to purchase the parts?

Should Waterway Engine continue to make the part sets or accept the offer to purchase them for $285? image text in transcribed

Waterway Engine Incorporated produces engines for the watercraft industry. An outside manufacturer has offered to supply several component parts used in the engine assemblies, which are currently being produced by Waterway. The supplier will charge Waterway \$285 per engine for the set of parts. Waterway's current costs for those part sets are direct materials, $145; direct labor, \$80; and manufacturing overhead applied at 100% of direct labor. Variable manufacturing overhead is considered to be 20% of the total, and fixed overhead will not change if the part sets are acquired from the outside supplier. Required: a. What would be the net cost advantage or disadvantage if Waterway decided to purchase the parts? b. Should Waterway Engine continue to make the part sets or accept the offer to purchase them for $285