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Troy Engines Ltd. Manufactures a variety of engines. The company has always produced all of the n…

by | Sep 9, 2023 | accounting

Test No... t. En engines, including Ltd., a vari of company has always produced of the necessary parts for is cost of all the cost of producing unit. carbu this offer supplier has offered to sell the type carburetor to Troy to its own has gathered following information relatin Lud The Ltd., the To evaluate An outside retor intermal Troy Engines 15,000 units Per Unit per ear Direct materials. Direct labor. $210,000 14 Variable manufacturing overhead. $150,000 Fixed manufacturing overhead, traceable $45,000 $90,000 Fixed manufacturing overhead, allocated. Total $135,000 If 42 $630,000 the carburet were purchased. Troy Engines Ltd, could use the freed capacity to launch a new product. The segment. tors margin of the new product would be $150,000 per year. If the carburetors purchased, one-third of the fixed overhead would traceable to would be avoided. What be the impact on the companys overall net operating income purchasing the carburetors from the outside supplier? A. et operating income would increase by $60,000 per year. Net operating income would decline by $10,000 per year. C. Net operating income would decline by $30,000 per year. D. Net operating income would increase by s10,000 per year.

Troy Engines Ltd. Manufactures a variety of engines. The company has always produced all of the necessary parts for its engines including all the carburettors. An outside supplier has offered to sell the type carburetor to Troy Engines, Ltd, for of cost $35 per unit. To evaluate this offer Troy Engines, Ltd., has gathered the following information relating to its own cost of producing the carburettor internally: 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 $150,000 per year. If the carburetors purchased, one-third of the fixed manufacturing overhead traceable would be avoided. What would be the impact on the company’s overall net operating income purchasing the carburetors from the outside supplier? A. Net operating income would increase by $60,000 per year. B. Net operating income would decline by $10,000 per year. C. Net operating income would decline by $30,000 per year. D. Net operating income would increase by $10,000 per year.

  

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