Exercise 12-3 Make or Buy a Component [L012-3] 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 offered to sell one type of carburetor to Troy Engines, Ltd., for a cost of$19 per unit. To evaluate this offer, Troy Engines, Ltd., has gathered the following information relating to its own cost of producing the carburetor internally 14.500 Units Per Year Per Unit Direct 72,500 materials 101,500 Direct labor Variable 29,000 manufacturing overhead Fixed manufacturing 87,000 overhead, traceable Fixed manufacturing 130,500 overhead, allocated Total cost 420,500 "40% supervisory salaries; 60% depreciation of special equipment (no resale value)