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 sell one type of carburetor to Troy Engines, Ltd., for a cost of $34 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	14,900 Units per year
Direct materials	$9	$134,100
Direct labor	11	163,900
Variable manufacturing overhead	2	29,800
Fixed manufacturing overhead, traceable	9*	134,100
Fixed manufacturing overhead, allocated	13	193,700
Total cost	$44	$655,600

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

Requirement 1:

What will be the total relevant cost of 14,900 units, if they are manufactured internally?

Requirement 2:

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 $63,000 per year.

What will be the total relevant cost of 14,900 units, if they are manufactured internally?