We Make Company has traditionally manufactured a number of different standard machine parts. It is now exploring an outsourcing decision for several of the parts that it currently produces. Cost information for one such machine part is given below: Variable cost/unit Fixed manufacturing costs (total) Allocated corporate overhead Unit product cost (based on 500 units) $ 31.00 5,720.00 6,560.00 $ 55.56 Fifty percent of the fixed manufacturing costs are directly traceable to this specific machine part and therefore avoidable. An outside supplier will sell the part at a price of $56 per unit if 500 units are purchased. Required: Prepare an analysis whether We Make should continue to manufacture this machine part or whether it should purchase it from the outside supplier (Negative amounts should be indicated by a minus sign. Round "Per Unit" to 2 decimal places.) 500 Units Buy Per Unit Make Difference Purchase Variable cost Fixed manufacturing overhead Common costs Total costs 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 produce and sell one type of carburetor to Troy Engines Ltd. for a cost of $54 per unit. To evaluate this offer, Troy Engines Ltd. has gathered the following information relating to its own cost of producing the carburetor internally: 1. Direct materials cost $33 per unit. 2. Troy Engines pays its direct labour employees $20 per hour, each carburetor requires 30 minutes of labour time. 3. Variable manufacturing overhead is allocated at 30% of direct labour cost. 4. Total fixed manufacturing cost amounts to $15 per unit, of which 60% is allocated common cost and the remaining 40% covers depreciation of special equipment and supervisory salaries. The special equipment has no resale value. Supervisory personnel will be transferred to a different department if the company decides to purchase the carburetor from the outside supplier. 5. Yearly production of this type of carburetor is 16,900 units. Required: 1-a. Assume that the company has no alternative use for the facilities that are now being used to produce the carburetors. Compute the total differential cost per unit for producing and buying the product. Total differential cost (per unit) in favour of 1-b. Should the outside supplier's offer be accepted? O Yes No 2-a. 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 $150,000 per year. Compute the total differential cost for producing and buying the product. Total differential cost in favour of 2-b. Should Troy Engines Ltd. accept the offer to buy the carburetors for $54 per unit? Yes O No