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Troy Engines Lid manufactures a variety of engines for use in heavy equipment. The company has always produced all of the necessary parts for its

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Troy Engines Lid 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 produce and sell one type of carburetor to Troy Engines Ltd. for a cost of 512 per unr. To evaluate this offer, Troy Engines tad nos gathered the following Information relating to its own cost of producing the carburetor internally 1 Direct materials cout $21 per un 2 Troy Engines pays its direct labour employees $20 per hour, each carburetor requires 30 minutes of labour time. 3. Variable manufacturing overhead is allocated at 30of direct labour cost 4 Totalfred manufacturing cost amounts to $15 per unr, of which 60% is allocated common cost and the remaining 40% covers depreciation of special equipment and supervisory salaries. The special equipment has no resale value Supervisory personnel will be transferred to a different department ll the company decides to purchase the carburetor from the outside, supplier 5. Yearly production of this type of carburetor is 15.700 units Required: 1. Assume that the company has no alternative use for the facilities that are now being used to produce the carburetors. Compute the total differential com per unit for producing and buying the product Toler

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