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Troy Engines, Ltd., manufactures a variety of engines for use in heavy equipment. The company has always produced all of theComplete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Should the outlete this question by ering answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Suppose that if the carburRequired 1 Required 2 Required 3 Required 4 Given the new assumption in requirement 3, should the outside suppliers offer be

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Answer #1
1
Per unit Total 13000 units
Make Buy Make Buy
Direct materials 13 169000
Direct labor 9 117000
Variable manufacturing overhead 3 39000
Fixed manufacturing overhead traceable 1 13000
Purchase cost 30 390000
Total 338000 390000
Difference in favor of making = 338000-390000 = $52000
Financial (disadvantage) (52000)
2
NO, Reject the offer
3
Make Buy
Total cost 338000 390000
Opportunity cost 130000
Total relevant cost 468000 390000
Difference in favor of buying = 468000-390000 = $78000
Financial advantage 78000
4
Yes, Accept the offer
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