Exercise 11-3 Make or Buy Decision [L011-3] 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 offer Engines. Ltd. for a cost of $35 per unit. To evaluate this offer. Troy Engines. Ltd., has gathered the following information r ed to sell one type of carburetor to Troy own cost of producing the carburetor internally 15,eee Units Per Unit per Year Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead, traceable s 14 $ 218,e0e 158,0e0 45,8e0 18 90,880 9 135,ee0 s42 $ 63,eee Fixed manufacturing overhead, allocated Total cost One-third supervisory salaries; two-thirds depreciation of special equipment (no resale value). Required: 1. 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 15,000 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 $150.000 per year. Given this new assumption, what would be the financial advantage Oo Hi e One-third supervisory salaries; two-thirds depreciation of special equipment (no resale value). Required 1. 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 15,000 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 prod segment margin of the new product would be $150,000 per year. Given this new assumption, what would be the financial advantage (disadvantage) of buying 15,000 carburetors from the outside supplier? 4. Given the new assumpti on in requirement 3, should the outside supplier's offer be accepted? Complete this question by entering your answers in the tabs below. 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 15,000 carburetors from the outside supplier? Required 2>