In this assignment we will use the tools that we have learned so far to help us make decisions on how best to use our cost data to help us make decisions to maximize profitability. We will also look...

Problem 1
    Enter titles and accounts in the green cells
    Enter Numbers in the blue cells
    Enter your Calculations in the yellow cells
    Instructions: Troy Manufacturing manufactures many different prodcuts. Help Troy Manufacturing decided how to proceed in these three separate scenarios:
    a.    Special order
     Troy Mfg. has received a special one-time order for 15,000 small coolers at $5 per unit. Troy currently produces and sells 75,000 units at $8.00 each. This level represents 80% of its capacity. These coolers would be marketed under the wholesaler’s name and would not affect Troy’s sales through its normal channels. Production costs for these units are $3.50 per unit, which includes $2.25 variable cost and $1.25 fixed cost. Should Troy accept this offer? Support your answer with expense and income numbers.
        per unit    Per Unit    Total income
    Special Order    15,000    5.00    75,000
    variable costs    15,000    2.25    33,750
    incremental income            41,250
    Decision    The company should accept the special order as it will lead to incremental revenue of $41,250 which is an added advantage to the company.
    b.    Make or buy
    Troy Company currently manufactures 75,000 units per year of a key component for its manufacturing process. Variable costs are $2.25 per unit, fixed costs related to making this component are $85,000 per year, and allocated fixed costs are $65,250 per year. The allocated fixed costs are unavoidable whether the company makes or buys this component. The company is considering buying this component from a supplier for $3.25 per unit. Should it continue to manufacture the component,...