Exerclse $11-3($Algo$)$ Make or Buy Decislon $[$LO$11-3]$

Troy Engines, Limited, manufactures o variety of engines for use in heavy equipment. The company has alwoys produced all of the

necessary ports for its engines, including all of the carburetors. An outside supplier hos offered to sell one type of carburetor to Troy

Engines, Limited, for o cost of $$32$ per unit. To evaluate this offer, Troy Engines, Limited, has gathered the following information relating

to its own cost of producing the carburetor internally:

Requlred:

Assuming the compony has no alternative use for the facilities that are now being used to produce the carburetors, what would be

the financial advantoge $($disadvantoge$)$ of buying $17,000$ carburetors from the outside supplier?

Should the outside supplier's offer be accepted?

Suppose that if the carburetors were purchosed, Troy Engines, Limited, could use the freed capacity to launch o new product. The

segment margin of the new product would be $$170,000$ per year. Given this new assumption, what would be the financial advantage

$($disodvontage$)$ of buying $17,000$ corburetors from the outside supplier?

Given the new sssumption in requirement $3,$ should the outside supplier's offer be accepted?

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Required $4$

Suppose that if the carburetors were purchased, Troy Engines, Limited, could use the freed capacity to launch a new product.

The segment margin of the new product would be $$170,000$ per year. Given this new assumption, what would be the financial

advantage $($disadvantage$)$ of buying $17,000$ carburetors from the outside supplier?