value: 1.00 points Troy Engines. Ltd., manufactures a variety of engines for use
ID: 2583475 • Letter: V
Question
value: 1.00 points Troy Engines. Ltd., manufactures a variety of engines for use in heavy equipment. The c produced all of the necessary parts for its engines, including all of the carburetors. An outside s t Troy Engines, Ltd., has gathered the following information relating to its own cost of producing the carburetor internally: upplier has Engines, Ltd.. for a cost of $35 per unit. To evaluate this offer 15,000 Units Year s 210,000 150,000 45,000 90,000 Direct labor Variable manufacturing overhead $14 10 Fixed manufacturing overhead, traceable Fixed manufacturing overhead, allocated Total cost $42 9 630.000 -One-third supervisory salaries two-thirds depreciation of special equipment (no resale value) Required: 1a. Assuming that the company has no alternative use for the facilities that are now being used to produce the carburetors, compute the total cost of making and buying the parts Total relevant cost (15 units NO CELL PHONE USE RECEIPTS GIVEN ON ALL TRANSACTIONSExplanation / Answer
1a) Calculate relevant cost :
1b) Reject, outside supplier's offer should be reject...
2a) Calculate relevant cost :
2b) Accept, outside supplier's offer should be accept...
Make Buy Direct material 210000 Direct labour 150000 Variable overhead 45000 Avoidable fixed overhead 30000 Purchase cost (15000*35) 525000 Total relevant cost 435000 525000Related Questions
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