es Troy Engines, Limited, manufactures a variety of engines for use in heavy equipment. The company...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
es Troy Engines, Limited, manufactures a variety of engines for use in heavy equipment. The company has always produced all of the parts for its engines, including the carburetors. An outside supplier 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, summarized the cost of producing the carburetor internally as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead, traceable Fixed manufacturing overhead, allocated Total cost Per 20,000 Units Per Unit $ 17 11 3 Year $ 340,000 220,000 60,000 3* 60,000 6 120,000 $ 40 $ 800,000 "One-third supervisory salaries; two-thirds depreciation of special equipment (no resale value). Required: 1. If the company has no alternative use for the facilities being used to produce the carburetors, what would be the financial advantage (disadvantage) of buying 20,000 carburetors from the outside supplier? 2. Should the outside supplier's offer be accepted? 3. Suppose if the carburetors were purchased, Troy Engines, Limited, could use the freed capacity to launch a new product with a segment margin of $200,000 per year. Given this new assumption, what would be the financial advantage (disadvantage) of buying 20,000 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 D Given the new assumption in requirement 3, should the outside supplier's offer be accepted? es Troy Engines, Limited, manufactures a variety of engines for use in heavy equipment. The company has always produced all of the parts for its engines, including the carburetors. An outside supplier 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, summarized the cost of producing the carburetor internally as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead, traceable Fixed manufacturing overhead, allocated Total cost Per 20,000 Units Per Unit $ 17 11 3 Year $ 340,000 220,000 60,000 3* 60,000 6 120,000 $ 40 $ 800,000 "One-third supervisory salaries; two-thirds depreciation of special equipment (no resale value). Required: 1. If the company has no alternative use for the facilities being used to produce the carburetors, what would be the financial advantage (disadvantage) of buying 20,000 carburetors from the outside supplier? 2. Should the outside supplier's offer be accepted? 3. Suppose if the carburetors were purchased, Troy Engines, Limited, could use the freed capacity to launch a new product with a segment margin of $200,000 per year. Given this new assumption, what would be the financial advantage (disadvantage) of buying 20,000 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 D Given the new assumption in requirement 3, should the outside supplier's offer be accepted?
Expert Answer:
Answer rating: 100% (QA)
Answer Here are the answers to the questions Required 1 If the company has no alternative use for th... View the full answer
Related Book For
Managerial Accounting
ISBN: 978-1259307416
16th edition
Authors: Ray Garrison, Eric Noreen, Peter Brewer
Posted Date:
Students also viewed these accounting questions
-
Human Cloning Cloning has been used to clone tissue, organs and even a sheep. Cloning a human being however has caused a lot of controversy. I am going to write a research paper answering the...
-
Design a dam structure (your choice of shape and size) that will collect water and will be used for water supply, power generation, and flood control. Consider that the maximum water surface level...
-
Which of the following are continuous variables? [Indicated by 'yes' or 'no'] a. Stock price b. Eye color c. Country of origin d. Gender e. Blood pressure f. Height
-
The following are the major balance sheet classifications: Current assets (CA) Long-term investments (LTI) Property, plant, and equipment (PPE) Intangible assets (IA) Match each of the following...
-
A four cylinder, four stroke cycle petrol engine develops \(40 \mathrm{~kW}\) at \(2500 \mathrm{rpm}\). The mean effective pressure is \(0.8 \mathrm{MPa}\) and mechanical efficiency is \(80 \%\)....
-
Rosa Recycling recycles newsprint, cardboard, and so forth, into recycled packaging materials. For the coming year, Rosa estimates total manufacturing overhead to be $ 369,260. The companys managers...
-
(20 points) For each of the histories below, state whether it is (a) sequentially consistent, (b) linearizable. Justify your answer. All variables are initially zero. Concurrent History H1 P1 [...
-
Can you analyze the comedy" French Restaurant " by Key & Peele on comedy central YouTube 2018 video where Peele took a lady to the restaurant claiming to know French but was embarrassed when his date...
-
what ways do historical legacies of colonialism, imperialism, and slavery intersect with contemporary systems of power to shape complex hierarchies of inequality and marginalization ?
-
What does the term "rolling grass" mean in Hollywood? Describes a particularly bad screening of a film, as the reels were "rolling gross.
-
If project scope is increased, what will likely happen to project time and project cost?
-
How do reviews and recommendations relate to situation-specific circumstances in the context of service evaluation?
-
Assume that Brian resigns as trustee. Pursuant to the terms of the trust, a family friend, Lenora, becomes trustee. Lenora sells the houses and invests the proceeds in government bonds. How should...
-
What would an auditor do when a discrepancy in the re-performance of the reconciliation of the cash account is discovered?
-
On October 1, 2021, Adoll Company acquired 2,600 shares of its $1 par value stock for $38 per share and held these shares in treasury. On March 1, 2023, Adoll resold all the treasury shares for $34...
-
What is the direction of the magnetic field at a point vertically (a) above (b) below segment 1 in Figure 28.5? Figure 28.5 Mapping the magnetic field of a current loop. The magnetic field...
-
Make a sketch showing the directions of the magnetic forces exerted on each other by (a) an electron moving in the same direction as the current through a wire, (b) a moving charged particle and a...
-
As the current loop in Figure 28.10 rotates over the first \(90^{\circ}\), do the magnitudes of (a) the magnetic force exerted on the horizontal sides and (b) the torque caused by these forces...
Study smarter with the SolutionInn App