1 | ||||
Per unit | Total 23000 units | |||
Make | Buy | Make | Buy | |
Direct materials | 16 | 368000 | ||
Direct labor | 9 | 207000 | ||
Variable manufacturing overhead | 4 | 92000 | ||
Fixed manufacturing overhead traceable | 2 | 46000 | ||
Purchase cost | 37 | 851000 | ||
Total | 713000 | 851000 | ||
Difference in favor of making = 713000-851000 = 138000 | ||||
Financial (disadvantage) (138000) | ||||
2 | ||||
No, Reject the offer | ||||
3 | ||||
Make | Buy | |||
Total cost | 713000 | 851000 | ||
Opportunity cost | 230000 | |||
Total relevant cost | 943000 | 851000 | ||
Difference in favor of buying = 943000-851000 = 92000 | ||||
Financial advantage 92000 | ||||
4 | ||||
Yes, Accept the offer |
Exercise 12-3 Make or Buy Decision [LO12-3] Complete this question by entering your answers in the...
Exercise 12-3 Make or Buy Decision (LO12-3] 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, including all of the carburetors. An outside supplier has offered to sell one type of carburetor to Troy Engines. Ltd., for a cost of $37 per unit. To evaluate this offer. Troy Engines, Ltd., has gathered the following information relating to its own cost of producing the...
Exercise 12-3 Make or Buy Decision (LO12-3] 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, 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...
Exercise 12-3 Make or Buy Decision (LO12-3] 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, including all of the carburetors. An outside supplier has offered to sell one type of carburetor to Troy Engines, Ltd., for a cost of $33 per unit. To evaluate this offer, Troy Engines, Ltd., has gathered the following information relating to its own cost of producing the...
Exercise 12-3 Make or Buy Decision (LO12-3] 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, including all of the carburetors. An outside supplier has offered to sell one type of carburetor to Troy Engines, Ltd., for a cost of $32 per unit. To evaluate this offer, Troy Engines, Ltd., has gathered the following information relating to its own cost of producing the...
Check my work Exercise 12-3 Make or Buy Decision (LO12-3) 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, including all of the carburetors. An outside supplier has offered to sell one type of carburetor to Troy Engines, Ltd., for a cost of $32 per unit. To evaluate this offer, Troy Engines, Ltd., has gathered the following information relating to its own cost...
Exercise 11-3 Make or Buy Decision (LO11-3) 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, including all of the carburetors. An outside supplier has offered to sell one type of carburetor to Troy Engines, Ltd., for a cost of $30 per unit. To evaluate this offer, Troy Engines, Ltd., has gathered the following information relating to its own cost of producing the...
PLEASE PROVIDE FORMULAS SO I KNOW HOW TO SOLVE FOR. TY! Exercise 12-3 Make or Buy Decision (L012-3] 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, including all of the carburetors. An outside supplier has offered to sell one type of carburetor to Troy Engines, Ltd., for a cost of $30 per unit. To evaluate this offer, Troy Engines, Ltd., has gathered...
Exercise 12-3 Make or Buy Decision [LO12-3] 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, 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...
EXERCISE 11-3 Make or Buy Decision LO11-30 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, 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...
Exercise 12-3 Make or Buy Decision [LO12-3] 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, 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...