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One question, four parts :) 3 Exercise 12-3 Make or Buy Decision [L012-3] Troy Engines, Ltd., manufactures a variety of engines for use In heavy
One question, four parts :)
3 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 $35 per unit. To evaluate this offer, Troy Engines, Ltd., has gathered the following Information relating to lts own cost of producing the carburetor Internally: 2.5 points 14,808 Units eBook Per Unit Per Year $14 $196,8ee 14e,ee Direct materials Direct labor variable manufacturing overhead Fixed manufacturing overhead, traceable Fixed manufacturing overhead, allocated Total cost 1e Hint 56,00 84,000 126,ee $43 $ 602,80e Print One-third supervisory salaries, two-thirds depreclation of special equipment (no resale value). References Requirec 1. Assuming the company has no alternative use for the facilties that are now being used to produce the carburetors, what would be the financlal advantage (disadvantage) of buying 14,000 carburetors from the outside supplier? 2. Should the outside suppller'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 financlal advantage (disadvantage) of buying 14,000 carburetors from the outside suppliler? 4. Given the new assumption In requirement 3, should the outside supplier's offer be accepted? 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 supplierStep by Step Solution
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