Exercise 12-3 Make or Buy Decision [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 $30 per unit. To evaluate this offer, Troy Engines, Ltd., has gathered the following information relating to its own cost of producing the carburetor internally: 13,000 Units per Year Unit Year Direct materials Direct labor Variable manufacturing overhead Pixed manufacturing overhead, traceable Fixed manufacturing overhead, allocated Total cost 13 169,000 9 117,000 3 39,000 3 39,000 78,000 $34 $442,000 One-third supervisory salaries; two-thirds depreciation of special equipment (no resale value)