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Troy Engines, timited, manufactures a variety of engines for use in heavy equipment: The cormpany has always ptoduced ali of the necessary parts tor its
Troy Engines, timited, manufactures a variety of engines for use in heavy equipment: The cormpany has always ptoduced ali of the necessary parts tor its engines including ail of the carburetors. An outside supplier has offered to sell one type of carburetor to Troy Engines, Limited, for a cost of $36 per unit To evaluate this offer, Troy Engines. Limited, has gathered the following information relating to its own cost of prochucing the carburetor internally "One-third supervisory salanies, two-thards depreciation of special equipment (no resale value). Required: 1. Assuming the company has no alternative use for the facilities that are now being used to produce the carburetors, what would be the financial advantage (disadvantage) of buying 20,000 carburetors from the outside suppire? 2. Should the outside supplier's offer be accepted 3. Stippose that if the carburetors were purchased, Troy Engines, Limited, could use the freed capacity to launch a new product The segmect margin of the new product would be 5200.000 per year Given this new assumption, what wourd be the financia! advantage (disedvantage) of buying 20,000 carburetors from the outside suppliep? 4. Given the new assumption in tequitement 3 , should the outside suppliers offer be accepted? Troy Engines, timited, manufactures a variety of engines for use in heavy equipment: The cormpany has always ptoduced ali of the necessary parts tor its engines including ail of the carburetors. An outside supplier has offered to sell one type of carburetor to Troy Engines, Limited, for a cost of $36 per unit To evaluate this offer, Troy Engines. Limited, has gathered the following information relating to its own cost of prochucing the carburetor internally "One-third supervisory salanies, two-thards depreciation of special equipment (no resale value). Required: 1. Assuming the company has no alternative use for the facilities that are now being used to produce the carburetors, what would be the financial advantage (disadvantage) of buying 20,000 carburetors from the outside suppire? 2. Should the outside supplier's offer be accepted 3. Stippose that if the carburetors were purchased, Troy Engines, Limited, could use the freed capacity to launch a new product The segmect margin of the new product would be 5200.000 per year Given this new assumption, what wourd be the financia! advantage (disedvantage) of buying 20,000 carburetors from the outside suppliep? 4. Given the new assumption in tequitement 3 , should the outside suppliers offer be accepted
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