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Troy Engines, Limited, manufactures a variety of engines for use in heavy equipment. The comp necessary parts for its engines, including all of the catburetors.
Troy Engines, Limited, manufactures a variety of engines for use in heavy equipment. The comp necessary parts for its engines, including all of the catburetors. An outside supplier has offered Engines, Limited, for a cost of $36 per unit. To evaluate this offer Troy Engines. Limited, has gat to its own cost of producing the carburetor internally: "One third supervisory salaries, two-thirds depreciation of special equipment (no resale value) Required: 1. Assuming the company has no alternative use for the faciities that are now being used to produce the carburetors, what would be the financial advantage (disadvantage) of buying 20,000 carburefors from the ousside suppler? 2. Should the outside suppiler 5 otfer be accepted? 3 Suppose that if the carburetors were gurchastd, Troy Eng ines, Limited, could use the freed capacity to lounch a new product The segment margin of the new product would be $200000 per year. 6 ven this new assumprion, what would be the financiat advantage (disadvantage) of buying 20,000 carburetors from the outside supplieg? 4. Given the new asstamption in requirement 3 ; should the outside supplier s offer be accepted? Complete this question by entering your answers in the tabs below. Given the now absumption in requirement 3 , should the outside supplier's offer be accepted
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