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Exercise 13-3 (Algo) Sourcing Decisions [LO13-3] Troy Engines, Limited, manufactures a variety of engines for use in heavy equipment. The company has always produced all

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Exercise 13-3 (Algo) Sourcing Decisions [LO13-3] Troy Engines, Limited, manufactures a variety of engines for use in heavy equipment. The company has always produced all of the parts for its engines, including the carburetors. An outside supplier offered to sell one fype of carburetor to Troy Engines, Limited, for a cost of \$37 per unit. To evaluate this offer, Troy Engines, Limited, summarized the cost of producing the carburetor internally as follows -One-third supervisory solaries, two-thirds depreciation of special equipment (no resale value) Required: 1 If the company has no alternative use for the facilities being used to produce the carburetars, what would be the financiat advantege (disodvantage) of buying 23,000 carburetors from the cutside supplie? 2 Should the outside supplier's offer be accepted? 3. Suppose if the cartsuretors were purchased, Troy Engines, Uimiled, could use the freed capacity to launch a new product with a segmerit margin of $230,000 per year Given this new assumption, what would be the financial actvantage (disadvantage) of buying 23,000 carburetors from the outside supplier? 4. Given the new assumption in requirement 3, should the outside suppliers offer be accepted

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