QUESTION 5 Cosi Ltd. manufactures a variety of engines for use in heavy equipment. The company has always prođuced all the necessary parts for its engines, including all of the carburettors. An outside supplier has offered to produce and sell one type of carburettor to Cosi Ltd., for a cost of £35.00 per unit. To evaluate this offer, the company has gathered the following information relating to its own cost of producing the carburettor internally: Per Unit 15,000 units per year Direct material £14.00 £210,000 Direct labour £10.00 £150,000 Variable manufacturing overhead £3.00 £45,000 Fixed manufacturing overhead, traceable £6.00* £90,000 Fixed manufacturing overhead. Allocated £9.00 £135,000 Total cost £42.00 £630,000 *One-third supervisory salaries; two-thirds depreciation of special equipment (no resale value).

QUESTION 5 Cosi Ltd. manufactures a variety of engines for use in heavy equipment. The company has always prođuced all the necessary parts for its engines, including all of the carburettors. An outside supplier has offered to produce and sell one type of carburettor to Cosi Ltd., for a cost of £35.00 per unit. To evaluate this offer, the company has gathered the following information relating to its own cost of producing the carburettor internally: Per Unit 15,000 units per year Direct material £14.00 £210,000 Direct labour £10.00 £150,000 Variable manufacturing overhead £3.00 £45,000 Fixed manufacturing overhead, traceable £6.00* £90,000 Fixed manufacturing overhead. Allocated £9.00 £135,000 Total cost £42.00 £630,000 *One-third supervisory salaries; two-thirds depreciation of special equipment (no resale value).

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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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 $30 per unit. To evaluate this offer, Troy Engines, Limited, has gathered the following information relating to its own cost of producing the carburetor internally: \table[[,, 13,000 Units ].[Direct materials, Per Unit,per Year], [Direct labor, $13, $169,000 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 $30 per unit. To evaluate this offer, Troy Engines, Limited, has gathered the following information relating to its own cost of producing the…
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 produce and sell one type of carburetor to Troy Engines Ltd. for a cost of $91.0 per unit. To evaluate this offer, Troy Engines Ltd. has gathered the following information relating to its own cost of producing the carburetor internally: PerUnit 36,000 Unitsper Year Direct materials $ 21 $ 756,000 Direct labour 24 864,000 Variable manufacturing overhead 17 612,000 Fixed manufacturing overhead, traceable 27.0 * 972,000 Fixed manufacturing overhead, allocated 23 828,000 Total cost $ 112.0 $ 4,032,000 * One-third supervisory salaries; two-thirds depreciation of special equipment (no resale value). Suppose that if the carburetors were purchased,…
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