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meriva
3 years ago
9

Troy Engines, Ltd., manufactures a variety of engines for use in heavy equipment. The company has always produced all of the nec

essary 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 $ 13 $ 260,000 Direct labor 11 220,000 Variable manufacturing overhead 4 80,000 Fixed manufacturing overhead, traceable 6 * 120,000 Fixed manufacturing overhead, allocated 9 180,000 Total cost $ 43 $ 860,000 *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 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 $200,000 per year. Given this new assumption, what would be financial advantage (disadvantage) of buying 20,000 carburetors from the outside supplier?

4. Given the new assumption in requirement 3, should the outside supplier’s offer be accepted?
Business
1 answer:
Paladinen [302]3 years ago
6 0

Answer:

1. Financial Disadvantage $140,000

2. Do not accept

3. Financial Advantage $ 60,000

4. Accept

Explanation:

Consider the costs and savings that will arise as a result of the Purchase

Purchase ($36 × 20,000)                                                      (720,000)

Direct materials ($ 13 × 20,000)                                            260,000

Direct labor ($11  × 20,000)                                                    220,000

Variable manufacturing overhead ($4  × 20,000)                 80,000

Fixed manufacturing overhead, traceable ($6  × 20,000)  120,000

Fixed manufacturing overhead, allocated ($9× 20,000)     180,000

Incremental Income / (loss)                                                   (140,000)

Do not accept as will result in the incremental loss of $140,000

Consider the costs and savings that will arise as a result of the Purchase

Purchase ($36 × 20,000)                                                      (720,000)

New Segment                                                                         200,000

Direct materials ($ 13 × 20,000)                                            260,000

Direct labor ($11  × 20,000)                                                    220,000

Variable manufacturing overhead ($4  × 20,000)                 80,000

Fixed manufacturing overhead, traceable ($6  × 20,000)  120,000

Fixed manufacturing overhead, allocated ($9× 20,000)     180,000

Incremental Income / (loss)                                                     60,000

Accept as this will result in incremental profit of $60,000

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The area of accountancy that is focused on arranging company financial information to give to managers to make decisions is
Alina [70]

Answer: Managerial Accounting or Management Accounting.

Managerial Accounting helps managers to use the data in the financial statements in order to take decisions. These decisions help them in managing the company's operations and aid in keeping control of matters under their purview.

Managerial Accounting includes any topics from cost accounting. It helps managers to make internal plans, execute them and also see if the plans have been accurate.

4 0
3 years ago
You have just turned 30 years​ old, have just received your​ MBA, and have accepted your first job. Now you must decide how much
igor_vitrenko [27]

Answer:

Find attached

Explanation:

The present value of $97,000 per year after retirement for 35 years is computed thus:

=-pv(rate,nper,pmt,fv)

rate is the plan rate of return of 6.5%

nper is 35 years(years after retirement)

pmt is the amount required per year

fv is not applicable is taken as zero

=-pv(6.5%,35,97000,0)=$1,327,634.80  

The amount needed in the account at retirement is the future value of the plan.

Regular yearly payment into the plan is =pmt

=pmt(rate,nper,-pv,fv)

=-pmt(6.5%,35,0,1327634.80)=$ 10,703.74

The percentage of income that must be contributed is found in the attached

Download xlsx
8 0
3 years ago
Annapolis Company has two service departments (Computer Operations & Maintenance Services). Annapolis has two production dep
eimsori [14]

Answer:

$56,900

Explanation:

                             Compt.         Maint.       Mixing      Packaging

Dept Cost             140,000      115,000

Cost allocation                            32941        41177         65882

(Computer)

Cost allocation                                

(Maintenance)                                                56900          91041

Total                                                                98077         156923

Workings.

Computer department cost allocation

Maintenance department = 4/17*140000 =32941

Mixing department = 5/17*140000 =41177

Packaging department = 8/17*140000= 65882

Maintenance department cost allocation

Total cost allocated = 147941

Mixing department = 5/13*147941 = 56900

Packaging department  = 8/13*147941 =91041

8 0
3 years ago
Depreciation--Jerry Company purchased machinery for $315,000 on May 1,2020 . It is estimated that it will have an useful life of
Gemiola [76]

Answer:

The depreciation for the first year is $75,000

Explanation:

In working hours method the depreciation on a fixed asset is charged using the ratio of numbers of hours utilized by the asset in a period and lifetime working capacity in hours.

First, we need to calculate the Depreciable value

Depreciable value = Cost of Asset - Salvage value = $315,000 - $15,000 = $300,000

Depreciation = Depreciable value x Numbers of hours worked / Total working capacity of Asset = $300,000 x 25,000 / 100,000 = $75,000

6 0
3 years ago
A company's gross profit was $118,350 and its net sales were $466,300. its gross margin ratio equals:
ladessa [460]

The gross margin ratio is a percentage resulting from dividing the amount of a company's gross profit by the amount of its net sales. In this case it would be 118,350/466,300 = 25.38%

3 0
3 years ago
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