Troy Engines, Ltd., manufactures a variety of engines for use in heavy equipment. Thecompany has always produced all of the necessary parts for its engines, including all ofthe carburetors. An outside supplier has offered to sell one type of carburetor to TroyEngines, Ltd., for a cost of $19 per unit. To evaluate this offer, Troy Engines, Ltd., hasgathered the following information relating to its own cost of producing the carburetorinternally:Direct materialsDirect laborVariable manufacturing overheadFixed manufacturing overhead, traceableFixed manufacturing overhead, allocatedTotal cost15,100PerUnitsUnitPer Year$ 5 $ 75,5007105,700230,2006" 90,600135,900437,900$29 $*40% supervisory salaries; 60% depreciation of special equipment (no resale value).Required:1a. Assuming that the company has no alternative use for the facilities that are nowbeing used to produce the carburetors, compute the total cost of making and buyingthe parts. (Round your Fixed manufacturing overhead per unit rate to 2 decimals.)

To compute the total cost of making and buying the parts, we need to consider both the cost of…

Answered: Troy Engines, Ltd., manufactures a…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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! Required information [The following information applies to the questions displayed below.] Kinnear Plastics manufactures various components for the aircraft and marine industry. Kinnear buys plastic from two vendors: Tappan Corporation and Hill Enterprises. Kinnear chooses the vendor based on price. Once the plastic is received, it is inspected to ensure that it is suitable for production. Plastic that is deemed unsuitable is disposed of. The controller at Kinnear collected the following information on purchases for the past year: Total purchases (tons) Plastic discarded Tappan 5,000 200 The purchasing manager has just received bids on an order for 330 tons of plastic from both Tappan and Hill. Tappan bid $2,112 and Hill bid $2,109 per ton. Effective cost per ton Hill 7,500 375 Required: 1-a. Assume that the average quality, measured by the amounts discarded from the two companies, will continue as in the past. What is the effective cost per ton for both Tappan and Hill? (Do not…
Wings Incorporated manufactures machine parts for aircraft engines. The CEO, Chucky Valters, was considering an offer from a subcontractor that would provide 2,300 units of product PQ107 for Valters
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 Unit 22,000 Units Per Year Direct materials $ 15 $ 330,000 Direct labor 8 176,000 Variable manufacturing overhead 3 66,000 Fixed manufacturing overhead, traceable 3*Footnote asterisk 66,000 Fixed manufacturing overhead, allocated 6 132,000 Total cost $ 35 $ 770,000 *Footnote asteriskOne-third supervisory salaries; two-thirds depreciation of special equipment (no resale value). Required: Assuming the company has no alternative use for the facilities that are now being used to produce the carburetors, what…
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U-RIDE, Incorporated currently produces the electric engines that are used in golf carts made and sold by the Company. Electco has offered to sell the electric engines to U-RIDE at a price of $291 each. Current production information follows: Unit-level material and labor $240 Facility-level depreciation of manufacturing equipment Product-level engine production supervisor's salary $6,300 /month $3,300 /month $21,500 Annual facility-level utilities U-RIDE is currently operating profitably producing and selling 3,300 engines a year using 80% of its manufacturing capacity. Which of the following is true? Multiple Choice O O U-RIDE should make the engines for cost savings of $51 per unit. Buying the units would increase U-RIDE's cost by $39 per unit. U-RIDE has avoidable costs of greater than $291 per unit and should therefore buy the engines. Buying the units would increase profitability by $90 per unit.
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: Per Unit 20,000 UnitsPer Year Direct materials $ 17 $ 340,000 Direct labor 11 220,000 Variable manufacturing overhead 3 60,000 Fixed manufacturing overhead, traceable 3 * 60,000 Fixed manufacturing overhead, allocated 6 120,000 Total cost $ 40 $ 800,000 *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 20,000…
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Culver Company manufactures equipment. Culver’s products range from simple automated machinery to complex systems containing numerous components. Unit selling prices range from $200,000 to $1,500,000 and are quoted inclusive of installation. The installation process does not involve changes to the features of the equipment and does not require proprietary information about the equipment in order for the installed equipment to perform to specifications. Culver has the following arrangement with Winkerbean Inc. ● Winkerbean purchases equipment from Culver for a price of $1,040,000 and contracts with Culver to install the equipment. Culver charges the same price for the equipment irrespective of whether it does the installation or not. The cost of the equipment is $581,000. ● Winkerbean is obligated to pay Culver the $1,040,000 upon the delivery and installation of the equipment. Culver delivers the equipment on June 1, 2020, and completes the installation of the equipment…
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