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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

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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 $37 per unit. To evaluate this offer, Troy Engines, Ltd., has gathered the following information relating to its own cost of producing the carburetor internally: 23, 000 Units Per Unit $ 16 Direct materials Direct labor Variable maufacturing overhead Fixed manuf acturing overhead, traceable Fixed manuf acturing overhead, allocated Total cost per Year $ 368, 000 207, 000 92, 000 138, 000 207, 000 $1, 012, 000 6* $44 One-third supervisory salaries, two-thirds depreciation of special equipment (no resale value)

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