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Troy Engines, Ltd., manufactures a variety of engines for use in heaw 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 $35 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 Direct materials Direct labor Variable manufacturing overhead Fixed sanufacturing overhead, traceable Fixed manufacturing overhead, allocated Total cost 14, eee Units Unit per Year $14 $196,000 140.00 56,00 84,00 126,00 35 682.000 "One-third supervisory salaries; two-thirds depreciation of special equipment (no resale value) Required 1 Required 2 Required 3 Required 4 Assuming the company has no alternative use for the facilities that are now being used to produce the carburetors, what would be the financial advantage (disadvantage) of buying 14,000 carburetors from the outside supplier? Financial (disadvantage) Required 2 > Required 1 Required 21 Required 3 Required 4 Suppose that 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 $140,000 per year. Given this new assumption, what would be the financial advantage (disadvantage) of buying 14,000 carburetors from the outside supplier? Financial advantage

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