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Exercise 11-3 Make or Buy Decision [LO11-3] Troy Engines, Ld, manufactures a variefy of eogines for use in heavy equipment. The compeny has always produced
Exercise 11-3 Make or Buy Decision [LO11-3] Troy Engines, Ld, manufactures a variefy of eogines for use in heavy equipment. The compeny has always produced at of the necessary parts for is engines, including all of the carburetors. An outside supplier has offered to sed one type of carburetor to Troy Engines, Ltd, for a cost of $37 per unit. To evaluate this offec, Troy Engines, Ldd, has gathered the following information relating to iss own cost of producing the carburetor internaly. "One-third supervisory salaries; two-thirds depreciation of special equipment the resale valued. Required: 1. Assuming the company has no athernative use for the focilities that are now being used to produce the carburetors, what would be the financial advantage (olsadvantage) of buying 23,000 carburetors from the outside supplier? 2. Should the outside suppliers offer be accepted? 3. Suppose that if the carburetors were purchased, Troy Engines. Lid, could use the freed capacity to lsunch a new product. The segment margin of the new product would be $230.000 per year. Given this now assumption, what would be the financial advantage (disadvantage) of buying 23,000 carburetors from the outside supplier? 4. Given the new assumption in requirement 3 , shouid the outside supplier's offer be accepted? Complete this question by entering your answers in the tabs below. Assuming the comperry has na atemative use for the facuties that are now being used to produce the cartburetors, what would be the financial advantage (disadvantage) of buying 23,000 carburetors from the outside suppler? Complete this question by entering your answers in the tabs below. 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 $230,000 per year. Given this new assumption, what would be the financial advantage (disadvantage) of buying 23,000 carburetors from the outside supplier
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