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 $31 per unit. to evaluate this offer, troy engines, ltd., has gathered the following information relating to its own cost of producing the carburetor internally:

per unit 15,000 units
per year
direct materials $ 9 $ 135,000
direct labor 11 165,000
variable manufacturing overhead 2 30,000
fixed manufacturing overhead, traceable 6* 90,000
fixed manufacturing overhead, allocated 13 195,000
total cost $ 41 $ 615,000
*40% supervisory salaries; 60% depreciation of special equipment (no resale value).

required:
1a.
assuming that the company has no alternative use for the facilities 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.)

If a firm plans to issue new stock, flotation costs (investment bankers' fees) should not be ignored. there are two approaches to use to account for flotation costs. the first approach is to add the sum of flotation costs for the debt, preferred, and common stock and add them to the initial investment cost. because the investment cost is increased, the project's expected return is reduced so it may not meet the firm's hurdle rate for acceptance of the project. the second approach involves adjusting the cost of common equity as follows: . the difference between the flotation-adjusted cost of equity and the cost of equity calculated without the flotation adjustment represents the flotation cost adjustment. quantitative problem: barton industries expects next year's annual dividend, d1, to be $1.90 and it expects dividends to grow at a constant rate g = 4.3%. the firm's current common stock price, p0, is $22.00. if it needs to issue new common stock, the firm will encounter a 6% flotation cost, f. assume that the cost of equity calculated without the flotation adjustment is 12% and the cost of old common equity is 11.5%. what is the flotation cost adjustment that must be added to its cost of retaine

Post test question number 9 for entering the job market

M. cotteleer electronics supplies microcomputer circuitry to a company that incorporates microprocessors into refrigerators and other home appliances. one of the components has an annual demand of 235 units, and this is constant throughout the year. carrying cost is estimated to be $1.25 per unit per year, and the ordering (setup) cost is $21 per order. a) to minimize cost, how many units should be ordered each time an order is placed? b) how many orders per year are needed with the optimal policy? c) what is the average inventory if costs are minimized? d) suppose that the ordering cost is not $21, and cotteleer has been ordering 125 units each time an order is placed. for this order policy (of q = 125) to be optimal, determine what the ordering cost would have to be.