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Troy Engines, Ltd, manufactures a varlety 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 $30 per unit. To evaluate this offer, Troy Engines, Ltd, has gathered the rollowing information relating to its own cost of producing the carburetor internally. 13,080 Units Per Unit per Year Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead, traceable Fixed manufacturing overhead allocated Total cost s 13 $ 169,080 117,000 39,000 3 39,0900 78,000 % 34% 442,000 ces One-third supervisory salaries; two-thirds depreclation of special equipment (no resale value) Required: 1. Assuming the company has no alternative use for the facities that are now being used to produce the carburetors, what would be the financial advantage (disadvantage) of buying 13,000 carburetors from the outside supplier? 2. Should the outside supplier's offer be accepted? 3. 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 $130,000 per year. Given this new assumption, what would be the fnancial advantage (disadvantage) of buying 13,000 carburetors from the outside supplier? 4. Given the new assumption in requirement 3, should the outside supplier's offer be accepted

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