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Tesla manufactures a variety of engines for use in its cars. The company has always produced all of the necessary parts for its engines, including

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Tesla manufactures a variety of engines for use in its cars. 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 Tesla, for a cost of $35 per unit. To evaluate this offer, Tesla, has gathered the following information relating to its own cost of producing the carburetor internally: 'One-third supervisory salaries; two-thitds 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 15,000 carburetors from the outside supplier? '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 15,000 carburetors from the outside supplier? 2. Should the outside supplier's offer be accepted? yes or no 3. Suppose that if the carburetors were purchased, Tesla, could use the freed capacity to launch a new product. The segment matgin of the new product would be $150,000 per year. Given this new assumption, what would be the financial advantage (disadvantage) of buying 15,000 carburetors from the outside supplier? 4. Given the new assumption in requirement 3 , should the outside supplier's offer be accepted? yes or no

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