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 $32 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		3		44,700
Fixed manufacturing overhead, traceable		6*		89,400
Fixed manufacturing overhead, allocated		13		193,700
Total cost	$	42	$	625,800

*40% supervisory salaries; 60% depreciation of special equipment (no resale value).

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 $32 per unit To evaluate this offer, Troy Engines. Ltd., has gathered the following information relating to its own cost of producing the carburetor internally: 14.900 Per Unit Per Year Direct materials 9 134.100 11 163,900 Direct labor Variable manufacturing overhead 44.700 Fixed manufacturing overhead, traceable 89.400 Fixed manufacturing overhead, allocated 13 193,700 Total cost 42 $625,800 "40% supervisory salaries; 60% depreciation of special equipment (no resale value). Required la. Assuming that the company has no alternative use for the facilities that are now being used to produce the carburetors, compute the total cost of making and buying the parts. (Round your Fixed manufacturing overhead per unit rate to 2 decimals.) Make Buy Total relevant cost (14,900 units) lb. Should the outside supplier's offer be accepted? O Accept Reject 2a. 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 $108,340 per year. Compute the total cost of making and buying the parts. (Round your Fixed manufacturing overhead per unit rate to 2 decimals.) Make Buy Total relevant cost (14,900 units) 2b. Should Troy Engines, Ltd., accept the offer to buy the carburetors for $32 per unit? Accept Reject