Troy Engines, Ltd., manufactures a variety of engines for use in heavy equipment. The company has always produced all of thenecessary parts for its engines, including all of the carburetors. An oútside supplier has offered to sell one type of carburetor to TroyEngines, Ltd., for a cost of $32 per unit. To evaluate this offer, Troy Engines, Ltd., has gathered the following information relating to itsown cost of producing the carburetor internally:17,000UnitsPerperYearUnitDirect materialsDirect labor$ 14 $ 238,0008136,000Variable manufacturing overheadFixed manufacturing overhead, traceableFixed manufacturing overhead, allocated351,0003*51,0006.102,000Total cost$ 34 $ 578,000*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 bethe financial advantage (disadvantage) of buying 17,000 carburetors from the outside supplier?2. Should the outside supplier's offer be accepted?3. Suppose that if the carburetors were purchased, Troy Engines, Ltd., could use the freed capacity to launch a new product. Thesegment margin of the new product would be $170,000 per year. Given this new assumption, what would be the financial advantage(disadvantage) of buying 17,000 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 1Required 2Required 3Required 4Assuming the company has no alternative use for the facilities that are now being used to produce the carburetors, whatwould be the financial advantage (disadvantage) of buying 17,000 carburetors from the outside supplier?Required 1Required 2>

Traceable fixed manufacturing overheads are relevant in decision making, whereas, allocated fixed…

Answered: Per Unit $ 14 Direct materials

Business

Accounting

Per Unit $ 14 Direct materials

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar 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 outside supplier has offered to sell one type of carburetor to Troy Engines, Ltd., for a cost of $39 per unit. To evaluate this offer, Troy Engines, Ltd., has gathered the following information relating to its own cost of producing the carburetor internally: Per Unit 21,000 UnitsPer Year Direct materials $ 18 $ 378,000 Direct labor 11 231,000 Variable manufacturing overhead 3 63,000 Fixed manufacturing overhead, traceable 3 * 63,000 Fixed manufacturing overhead, allocated 6 126,000 Total cost $ 41 $ 861,000 *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…
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 sell one type of carburetor to Troy Engines, Ltd., for a cost of $32 per unit. To evaluate this offer, Troy Engines, Ltd., has gathered the following information relating to its own cost of producing the carburetor internally: Per Unit 17,000 Unitsper Year Direct materials $ 14 $ 238,000 Direct labor 8 136,000 Variable manufacturing overhead 3 51,000 Fixed manufacturing overhead, traceable 3 * 51,000 Fixed manufacturing overhead, allocated 6 102,000 Total cost $ 34 $ 578,000 *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…
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 $36 per unit. To evaluate this offer, Troy Engines, Limited, has gathered the following information relathng to its own cost of producing the carburetor internally:. Per 20,000 Units Per Unit Year $ 340,000 200,000 40,000 180, 000 240,000 Direct materials $ 17 Direct labor 10 2 Variable manufacturing overhead Fixed manufacturing overhead, traceable Fixed manufacturing overhead, allocated 9* 12 $ 50 $ 1,000,000 Total cost *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 advantage (disadvantage)…
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 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 information relating to its own cost of producing the carburetor internally: 19,000 Units Per Unit Per Year ৪16 304, 000 Direct materials Direct labor 10 190,000 Variable manufacturing overhead Fixed manufacturing overhead, traceable Fixed manufacturing overhead, allocated 38,000 171,000 228,000 2 12 Total cont $ 49 ও 931, 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 advantage (disadvantage) of buying 19,000…
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 sell one type of carburetor to Troy Engines, Ltd., for a cost of $33 per unit. To evaluate this offer, Troy Engines, Ltd., has gathered the following information relating to its own cost of producing the carburetor internally: Per Unit 18,000 UnitsPer Year Direct materials $ 15 $ 270,000 Direct labor 9 162,000 Variable manufacturing overhead 4 72,000 Fixed manufacturing overhead, traceable 6 * 108,000 Fixed manufacturing overhead, allocated 9 162,000 Total cost $ 43 $ 774,000 *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…
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 $36 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 20,000 Units Per Unit Year $ 13 11 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead, traceable Fixed manufacturing overhead, allocated Total cost $.43 "One-third supervisory salaries; two-thirds depreciation of special equipment (no resale value). 4 6⁰ Complete this question by entering your answers in the tabs below. Required 11 Required 21 Required 3 Required 4 9 $ 260,000 220,000 80,000 Required: 1. Assuming the company has no alternative use for the facilities that are now being…
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 sell one type of carburetor to Troy Engines, Ltd., for a cost of $36 per unit. To evaluate this offer, Troy Engines, Ltd., has gathered the following information relating to its own cost of producing the carburetor internally: 15,000 Units Per Per Unit Year Direct materials $ 12 $ 180,000 180,000 60,000 90,000 135,000 $ 43 $ 645,000 Direct labor 12 Variable manufacturing overhead Fixed manufacturing overhead, traceable Fixed manufacturing overhead, allocated 4 9. Total cost *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 advantage (disadvantage) of buying 15,000…
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 $32 per unit. To evaluate this offer, Troy Engines, Limited, has gathered the following information relating to its own cost of producing the carburetor internally. Direct materials Direct labor Variable manufacturing overhead Per Unit $14 136,000 3 51,000 3+ Fixed manufacturing overhead, traceable Fixed manufacturing overhead, allocated Total cost 51,000 102,000 6 $ 34 $578,000 *One-third supervisory salaries; two-thirds depreciation of special equipment (no resale value). 8 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 17,000 carburetors from the…
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 sell one type of carburetor to Troy Engines, Ltd., for a cost of $36 per unit. To evaluate this offer, Troy Engines, Ltd., has gathered the following information relating to its own cost of producing the carburetor internally: Per Unit 20,000 Units Per Year Direct materials $ 17 $ 340,000 Direct labor 10 200,000 Variable manufacturing overhead 2 40,000 Fixed manufacturing overhead, traceable 9 * 180,000 Fixed manufacturing overhead, allocated 12 240,000 Total cost $ 50 $ 1,000,000 *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 advantage (disadvantage) of buying…
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 sell one type of carburetor to Troy Engines, Ltd., for a cost of $36 per unit. To evaluate this offer. Troy Engines, Ltd., has gathered the following information relating to its own cost of producing the carburetor internally: 15, e00 Units Per Unit $ 12 $ 180e,e00 per Year Direct materials Direct labor 12 Variable manufacturing overhead Fixed manufacturing overhead, traceable Fixed manufacturing overhead, allocated 180,000 60,000 90,000 135,000 $ 645,000 6* Total cost $ 43 *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 advantage (disadvantage) of buying 15,000…
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 $39 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 Unit 21,000 Units per Year Direct materials $ 18 $ 378,000 Direct labor 11 231,000 Variable manufacturing overhead 3 63,000 Fixed manufacturing overhead, traceable 3* 63,000 Fixed manufacturing overhead, allocated 6 126,000 Total cost $ 41 $ 861,000 *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…
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 $35 per unit. To evaluate this offer, Troy Engines, Ltd., has gathered the following Information relating to Its own cost of producing the carburetor Internally: 20, 000 Units Per Unit per Year $ 17 $ 340, 000 Direct materials Direct labor variable manufacturing overhead Fixed manufacturing overhead, traceable Fixed manufacturing overhead, allocated 11 220,000 60, 000 60,000 120,000 3 3* Total cost $ 40 $ 800, 000 *One-third supervisory salaries; two-thirds depreciation of special equipment (no resale value). Requlred: 1. Assuming the company has no alternative use for the facilities that are now belng used to produce the carburetors, what would be the financial advantage (disadvantage) of buylng…