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Troy Engines, Limited, man foctures a variety of engines for use in heavy equipment. The company has always prodiuced all of the ports for its
Troy Engines, Limited, man foctures a variety of engines for use in heavy equipment. The company has always prodiuced all of the ports for its engines, including the carbureto s. An outside supplier offered to sell one type 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? Onestird supervisory salaries, two-thirds depreciation of special equipment (no resale value). Roquired: 1. If the company has no altemative use for the facilities being used to produce the carburetors, what would be the financial advantage (disadvantage) of buying 23.000 carburetors from the outside supplier? 2. Shouk the outskie supplier's offer be accepted? 3. Suppose if the carburetors were purchased, Troy Engines, tim ted, could use the freed capacity to launch a new product with a segment margin or $230,000 per year. Given this new assumption, what would be the financial advantage (disadvantage) of buying 23,000 carburetors from the outsice supplier? 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. If the compary has no alternative use for the faclites oping used to produce the carburetors, what would be the financial advartage (disadvantoge) of buping 23,000 carburetors from the outside supplier
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