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Troy engines limited manufactures a variety of engines for use in heavy equipment the company has always produced all of the parts for its engines
Troy engines limited manufactures a variety of engines for use in heavy equipment the company has always produced all of the parts for its engines including thr carbuetors an outside supplier offered to sell one typ of carburetor to troy engines limited for a cost of$ per unit to evalute this off troy engines limited summarized the cost of producing the carburetor internally as follows direct materials per unit units per year direct labor per unit variable manufacturing overhead per unit fix manufacturing overhead traceable per unit fix manufacturing overhead allocated per unit total cost per unit one third supervisory salaries two thirds depreciation of special equipment no resale value required if the company has no alternative use for the facilities being used to produce the carburetors what would be the financial advantage disadvantage if buying carburetors from the outside supplier suppose if the carbuetors were purchased troy engines limited could use the freed capacity to launch a new product with a segment margin of per year given this new assumption what would be the financial advantage disadvantsge of buying caburetors from the outside supplier
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