Troy Manufacturing, Inc. produces exercise bicycles. The unit cost of manufacturing and marketing at the company's normal volume of 3,000 units per month follow: $100 Unit manufacturing costs: Variable Materials Variable Labor Variable OH Fixed OH Total unit manufacturing costs $500 Unit nonmanufacturing costs Variable Fixed Total unit nonmanufacturing costs Total unit cost $100 100 $200 $700 Troy has been contacted by a firm that has the manufacturing capability to make the engines it uses in its exercise bikes. The firm offers to make all the engines Troy needs for $450 each. 1. What would be the impact on NI of accepting the offer for the engines? 2. Suppose that, instead of producing the engines, Troy could use the capacity to make 500 less expensive exercise bikes that would sell for $750 each. Variable manufacturing costs for these bikes would be 70% of the costs of the current product. What would be the impact on NI of accepting the offer given this use of the freed-up capacity? Problem 6. (continued) Would your recommend that the offer be accepted? Explain