Exercise 12-3 Make or Buy Decision [LO12-3] Troy Engines, Ltd., manufactures a variety of engines for use in heavy equipment. The necessary parts for its engines, including all of the carburetors. An outside supplier has offered to sell one type of carburetor to Troy company has always produced all of $35 per unit. To evaluate this offer, Troy Engines, Ltd, has gathered the following information relating to its own cost of producing the carburetor internally: 14,000 Units Per Per Unit iYear Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead, traceable Pixed manufacturing Total cost 14 $ 196,000 10 140,000 456,000 84,000 9 126,000 $43 5 602,000 overhead, allocated 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 14,000 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 $140,000 per year. Given this new assumption, what would be the financial advantage (disadvantage) of buying 14,000 carburetors from the outside supplier? 4. Given the new assumption in requirement 3, should the outside supplier's offer be accepted? & Answer is not complete. 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 14,000 carburetors from the outside supplier? Required 2> 3 Required 1. Assuming the company has no alternative the financial advantage (disadvantage) of buying 14,000 carburetors from the outside supplier? use for the facilities that are now being used to produce the carburetors, what would be 2. Should the outside suppliers 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 $140,000 per year Given this new assumption, what would be the financial advantage ints (disadvantage) of buying 14,000 carburetors from the outside supplier? 4. Given the new assumption in requirement 3, should the outside supplier's offer be accepted? Answer is not complete. Complete this question by entering your answers in the tabs below Required 1 Reqird2Required 3 Required 4 pose 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 $140,000 per year. Given this new assumption, what would be the financial advantage (disadvantage) of buying 14,000 carburetors from the outside supplier? C Required 2 Required 4