Troy Engines Ltd. 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 produce and sell one type of the carburetors to Troy Engines Ltd. for a cost of $59.00 per unit. to evaluate this offer, Troy Engines Ltd. has gathered the following information relating to its own cost of producing the carburetor internally.

	Per unit	24,000 units per year
Direct materials	$17	$408,000
Direct labour	16	384,000
Variable manufacturing overhead	9	216,000
Fixed manufacturing overhead, traceable	15.0*	360,000
Fixed manufacturing overhead, allocated	15	360,000
Total cost	$72.0	$1,728,000

*One-third supervisory salaries; two-thirds depreciation of special equipment (no resale value).

Required:

1-a Compute the total differential cost per unit for producing and buying the product. (Round answer to1 decimal place)

	Make	Buy
Total differential cost(per unit)

1-b Should the outside sipplier's offer be accepted?

2-a Suppose that if the carburetors were purchased, Troy Engines Ltd. could use the freed capacity to launch a new product. The segment margin of the new product would be $340,000 pe year. Compute the total differential cost in producing and buying the product when the segment margin is foregone on a potential new product line.

	Make	Buy
Total differential cost

2-b Should Troy Engines Ltd. accepts the offer to buy the carburetors for $59 per unit?