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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 necessary parts for its

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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 necessary parts for its engines, including all of the carburetors. An outside suppler has offered to sell one type of carburetor to Troy Engines, Limited, for a cost of $35 per unit. To evaluate this offer, Troy Engines, Limited, has gathered the following informatlon relating to its own cost of producing the carburetor internally: 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 suppller's offer be accepted? 3. 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 $150,000 per year. Glven this new assumption, what would be the financlal 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? Assuming the company has no alternative use for the facilities that are now being used to produce the be the financial advantage (disadvantage) of buying 15,000 carburetors from the outside supplier? 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 $150,000 per year. Given this new assumption, what would be the financial advantage (disadvantage) of buying 15,000 carburetors from the outside suppller

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