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Troy Engines Ltd, manufactures a variety of engines. The company has always produced all of the necessary parts for its engines, including all the carburetors.

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Troy Engines Ltd, manufactures a variety of engines. The company has always produced all of the necessary parts for its engines, including all the carburetors. An outside supplier has offered to sell one type of carburetor to Troy Engines, Ltd., for a cost of $35 per unit. To evaluate this offer Troy Engines, Ltd., has gathered the following information relating to its own cost of producing the carburetor internally. If the carburetors were purchased. Troy Engines Ltd, could use the free capacity to launch a new product. The segment margin of the new product would be $150,000 per year. If the carburetors were purchased, one-third of the fixed manufacturing overhead traceable to carburetors would be avoided. What would be the impact on the company's overall net operating income of pure having the carburetors from the outside supplier? A. Net operating income would increase by $60,000 per year. B. Net operating income would decline by $10,000 per year C. Net operating income would decline by $30,000 per year. D. Net operating income would increase by $10,000 per year The Portland Division's operating data for the past two years are as follows: The Portland Division's margin in Year 2 was 150% of its margin for Year 1. How much was the division's operating income for Year 1? A. $192,000 B. $128,000 C. $112,000 D. $144,000 E. None of the above

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