Troy Engines, Limited, manufactures a variety of engines for use in heavy equipment. The company has...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Troy Engines, Limited, 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 sell one type of carburetor to Troy Engines, Limited, for a cost of $35 per unit. To evaluate this offer, Troy Engines, Limited, has gathered the following information relating to its own cost of producing the carburetor internally: Per 14,000 Units Unit Per Year Direct materials $ 196,000 $ 14 10 140,000 56,000 ৪4, 000 126,000 $ 602,000 *One-third supervisory salaries; two-thirds depreciation of special equipment (no resale value). Direct labor Variable manufacturing overhead Fixed manufacturing overhead, traceable Fixed manufacturing overhead, allocated 4 6* 9. Total cost $ 43 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 14,000 carburetors from the outside supplier? 2. Should the outside supplier's offer be accepted? 3. Suppose that if the carburetors were purchased, Troy Engines, Limited, could use the freed capacity to launch a new product. The segment margin of the new product would be $140,000 per year. Given this new assumption, what would be the financial advantage (disadvantage) of buying 14,000 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 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 14,000 carburetors from the outside supplier? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Suppose that if the carburetors were purchased, Troy Engines, Limited, could use the freed capacity to launch a new product. The segment margin of the new product would be $140,000 per year. Given this new assumption, what would be the financial advantage (disadvantage) of buying 14,000 carburetors from the outside supplier? < Required 2 Required 4 Financial (disadvantage) Financial advantage 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? Yes No Troy Engines, Limited, 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 sell one type of carburetor to Troy Engines, Limited, for a cost of $35 per unit. To evaluate this offer, Troy Engines, Limited, has gathered the following information relating to its own cost of producing the carburetor internally: Per 14,000 Units Unit Per Year Direct materials $ 196,000 $ 14 10 140,000 56,000 ৪4, 000 126,000 $ 602,000 *One-third supervisory salaries; two-thirds depreciation of special equipment (no resale value). Direct labor Variable manufacturing overhead Fixed manufacturing overhead, traceable Fixed manufacturing overhead, allocated 4 6* 9. Total cost $ 43 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 14,000 carburetors from the outside supplier? 2. Should the outside supplier's offer be accepted? 3. Suppose that if the carburetors were purchased, Troy Engines, Limited, could use the freed capacity to launch a new product. The segment margin of the new product would be $140,000 per year. Given this new assumption, what would be the financial advantage (disadvantage) of buying 14,000 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 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 14,000 carburetors from the outside supplier? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Suppose that if the carburetors were purchased, Troy Engines, Limited, could use the freed capacity to launch a new product. The segment margin of the new product would be $140,000 per year. Given this new assumption, what would be the financial advantage (disadvantage) of buying 14,000 carburetors from the outside supplier? < Required 2 Required 4 Financial (disadvantage) Financial advantage 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? Yes No
Expert Answer:
Answer rating: 100% (QA)
Avoidable Cost Direct Materal 196a00 Direct Laboyr 140000 Narmable manufactyring on Traceable fixe... 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
-
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...
-
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...
-
The C.W.C. Binck Company's Warrenton Division manufactures a variety of products, including Product 33 and Product 44. Recently, competitors have introduced new products competing with product 44 and...
-
Tom Lamont, age 30, and Lin Lamont, age 31, have been married for six years. They got married right after Tom graduated from college. They have come to you for help in planning their financial...
-
Does the elimination of the effects of intercompany sales of merchandise always affect the amount of reported consolidated net income? Explain.
-
Adam Rust looked at his mechanic and sighed. The mechanic had just pronounced a death sentence on his road-weary car. The car had served him well at a cost of $500 it had lasted through four years of...
-
A light-hydrocarbon mixture is to be separated by distillation as shown in Figure 10.37 into ethane-rich and propane-rich fractions. Based on the specifications given and use of the...
-
Frank Piankis company wants to establish art assembly line to manufacture its new product, the iScan phone. Franks goal is to produce 60 iScans per hour. Tasks, task times, and immediate predecessors...
-
At December 31, 2025, Novak had the following number of common and preferred shares. Common Preferred Authorized 564,000 60,000 Issued 188,000 10,000 Outstanding 179,000 10,000 I The dividends on...
-
Louie Long started a business called Louie's Lawn Service. The trial balance as of March 31, after the first month of operation, is as follows: REQUIRED 1. Analyze the following adjustments and enter...
-
Suppose that a child is misbehaving in a grocery store. The child's mother gives him a disapproving look. What does the mother's action? Explain
-
Define the terms mission and strategy and explain why they are important.
-
Summarize forecast errors and use summaries to make decisions.
-
If your company opted to pursue a strategy of unrelated diversification, what industries or product categories could it diversify into that would allow it to capitalize on using its present brand...
-
Which populations are most likely to use eHealth tools? Which are least likely?
-
For what health behaviors might eHealth applications be most effective? Why?
-
MODELING REAL LIFE pH is measured on a scale of 0 to 14 and refers to the concentration of an acid or base in water. The recommended pH for a swimming pool is 7.2 to 7.8. Write an inequality that...
-
Prairie Outfitters, Inc., a retailer, accepts paymnent through credit cards. During August, credit card sales amounted to $12,000. The processor charges a 3% fee. Assuming that the credit card...
-
What does a manufacturing cycle efficiency (MCE) of less than 1 mean? How would you interpret an MCE of 0.40?
-
The standard cost card for the single product manufactured by Cutter, Inc., is given below: Manufacturing overhead is applied to production on the basis of standard direct labor-hours. During the...
-
The management of Kunkel Company is considering the purchase of a $27,000 machine that would reduce operating costs by $7,000 per year. At the end of the machine's five-year useful life, it will have...
-
The overall process of creating a capital budget proposal has a lot of similarities to writing a business plan for a start-up company. Describe three aspects of the similarities between a budget...
-
There are three general categories of capital budget scenarios: replacement, expansion, and investment in a NewCo. Describe the overall decision-making context for each. How do they draw on similar...
-
In analysis, some focus seems to be on the need for NPV equations to be applied to projects that are mutually exclusive. But in practice we find that the lines are blurred in capital budgeting....
Study smarter with the SolutionInn App