Troy Engines, Limited, manufactures a varlety 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 $$40$ per unit. To evaluate this offer, Troy Engines, Limlted, summarized the cost of producing the carburetor internally as follows:

$*$One$-$third supervisory salarles; two$-$thirds depreclation of speclal equipment $($no resale value$).$

Required:

If the company has no alternative use for the faclitles belng used to produce the carburetors, what would be the financlal

advantage $($disadvantage$)$ of buying $15,000$ carburetors from the outside supplier?

Should the outside supplier's offer be accepted?

Suppose If the carburetors were purchased. Troy Englnes, Limited, could use the freed capacity to launch a new product with a

segment margin of $$150,000$ per year. Glven thls new assumption, what would be the financlal advantage $($disadvantage$)$ of buying

$15,000$ carburetors from the outside supplier?

Glven the new assumption in requirement $3,$ should the outside supplier's offer be accepted?

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