Troy Engines, Ltd, manufactures a variety of engines for use in heavy equipment. The company...
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Troy Engines, Ltd, manufactures a variety of engines for use in heavy equipment. The company has always produced all of the necessary parts for its engines, inoluding all of the carburetors. An outside supplier has offered to sell one type of carburetor to Troy Engines, L.td., for a cost of $45 per unit. To evaluate this offer, Troy Engines, Ltd, has gathered the following information relating to its own cost of producing the carburetor internally 14,100 Per UnitPer Year S 13 15 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead, traceable Fioxed manufacturing overhead, allocated Total cost S 183,300 211,500 4100 126,900 239,700 9 17 $ 55 $ 775.500 40% supervisory salaries: 60% depreciation of special equipment(no resale value). Required: a. Assuming that the company has no afternative use for the tacilties that are now being used to produce the carburetors, compute the total cost of making and buying the parts. (Round your Fixed manufacturing overhead per unit rate to 2 decimals.) Total relevant cost (14,100 units) 1b. Should the outside supplier's offer be accepted? Accept Reject
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