The make or buy decision Lakeview Engine Inc. produces engines for thewatercraft industry. An outside manufacturer has offered to supply several componentparts used in the engine assemblies, which are currently being produced by Lakeview.The supplier will charge Lakeview $270 per engine for the set of parts. Lakeview'scurrent costs for those part sets are direct materials, $160; direct labor, $80; andmanufacturing overhead applied at 100% of direct labor. Variable manufacturingoverhead is considered to be 20% of the total, and fixed overhead will not change if thepart sets are acquired from the outside supplier.bd 1200Required:Should Lakeview Engine continue to make the part sets or accept the offer to purchasethem for $270?Ovin

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Description: The make or buy decision Lakeview Engine Inc. produces engines for thewatercraft industry. An outside manufacturer has offered to supply several componentparts used in the engine assemblies, which are currently being produced by Lakeview.The supplie

Make vs buy is a method of selecting between producing and procuring a product from an external…

Answered: rge Lakeview $270 per engine for the se…

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rge Lakeview $270 per engine for the se se part sets are direct materials, $160; ad applied at 100% of direct labor. V d to be 20% of the total, and fixed overhea

Cornerstones of Cost Management (Cornerstones Series)

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ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter17: Activity Resource Usage Model And Tactical Decision Making

Section: Chapter Questions

Problem 10E: Brees, Inc., a manufacturer of golf carts, has just received an offer from a supplier to provide...

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Concept explainers

Process Costing

Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure. 

Job Costing

Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.

ABC Costing

Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.

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The make or buy decision Lakeview Engine Inc. produces engines for the
watercraft industry. An outside manufacturer has offered to supply several component
parts used in the engine assemblies, which are currently being produced by Lakeview.
The supplier will charge Lakeview $270 per engine for the set of parts. Lakeview's
current costs for those part sets are direct materials, $160; direct labor, $80; and
manufacturing overhead applied at 100% of direct labor. Variable manufacturing
overhead is considered to be 20% of the total, and fixed overhead will not change if the
part sets are acquired from the outside supplier.
bd 1200
Required:
Should Lakeview Engine continue to make the part sets or accept the offer to purchase
them for $270?
Ovin

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Waterway Engine Incorporated produces engines for the watercraft industry. An outside manufacturer has offered to supply several component parts used in the engine assemblies, which are currently being produced by Waterway. The supplier will charge Waterway $300 per engine for the set of parts. Waterway's current costs for those part sets are direct materials, $155; direct labor, $85; and manufacturing overhead applied at 100% of direct labor. Variable manufacturing overhead is considered to be 20% of the total, and fixed overhead will not change if the part sets are acquired from the outside supplier. Required: a. What would be the net cost advantage or disadvantage if Waterway decided to purchase the parts? b. Should Waterway Engine continue to make the part sets or accept the offer to purchase them for $300? a. b. Waterway Engine Incorporated should
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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 $30 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 13,000 Units Unit Per Year $ 13 $ 169,000 9 117,000 3 39,000 3* 6 39,000 78,000 $ 34 $ 442,000 *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 13,000 carburetors from the outside supplier? 2. Should the outside…
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