40% ercises Help Save & Exit Submit Check my work Troy Engines, Ltd., manufactur

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40% ercises Help Save & Exit Submit Check my work Troy Engines, Ltd., manufactures a variety of engines for use in heavy equipment. The company has always produce 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: Unite Per Unit Year Per Direet naterials Direct labor Variable manufacturing overhead Pixed manufacturing overhead, traceable Pixed manufacturing overhead, located Total cot 13 208,000 13 208,000 2 32,000 9 144,000 12192,000 $ 49 784,000 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 16,000 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. The segment margin of the new product would be $160,000 per year. Given this new assumption, what would be financial advantage (disadvantage) of buying 16,000 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 Prev 2 of 6 Score answer> 16 acBook Ai

Explanation / Answer

1 Per unit Total Make Buy Make Buy Direct materials 13 208000 Direct labor 13 208000 Variable manufacturing overhead 2 32000 Fixed manufacturing overhead traceable 3 48000 Purchase cost 35 560000 Total 496000 560000 Financial(disadvantage) ($64000) 2 Reject 3 Make Buy Total cost 496000 560000 Opportunity cost 160000 Total relevant cost 656000 560000 Financial advantage $96000 4 Accept

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