Troy Engines, Limited, 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, Limited, for a cost of $$37$ per unit. To evaluate this offer, Troy Engines,

Limited, has gathered the following information relating to its own cost of producing the

carburetor internally:

Required:

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 $23,000$ carburetors from the outside supplier?

Should the outside supplier's offer be accepted?

Suppose that if the carburetors were purchased, Troy Engines, Limited, could use the

freed capacity to launch a new product. The segment margin of the new product would

be $$230,000$ per year. Given this new assumption, what would be the financial

advantage $($disadvantage$)$ of buying $23,000$ carburetors from the outside supplier?

Given the new assumption in requirement $3,$ should the outside supplier's offer be

accepted?

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Required $1$

Suppose that if the carburetors were purchased, Troy Engines, Limited, could use the freed

The segment margin of the new product would be $$230,000$ per year. Given this new assum

advantage $($disadvantage$)$ of buying $23,000$ carburetors from the outside supplier?

Financial advantage