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 the carburetors. An outside supplier offered to sell one type of carburetor to Troy Engines, Limited, for a cost of $ per unit. To evaluate this offer, Troy Engines, Limited, summarized the cost of producing the carburetor internally as follows:

Per Unit Units Per Year

Direct materials $ $

Direct labor

Variable manufacturing overhead

Fixed manufacturing overhead, traceable

Fixed manufacturing overhead, allocated

Total cost $ $

Onethird supervisory salaries; twothirds 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 of buying carburetors from the outside supplier?

Should the outside suppliers offer be accepted?

Suppose if the carburetors 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 disadvantageof buyingcarburetors from the outside supplier?

Given the new assumption in requirement should the outside suppliers offer be accepted?