Exercise 13-3 (Static) Make or Buy Decision (LO13-3) Unit $ 14 10 3 6 9 Troy Engines, Limited, 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, Limited, for a cost of $35 per unit . To evaluate this offer, Troy Engines, Limited, has gathered the following Information relating to its own cost of producing the carburetor Internally 15,000 Units Per Year Direct saterials 5210,000 Direct labor 150,000 Variable manufacturing over head 45,000 Fixed Manufacturing overhead, traceable 90,000 Fixed manufacturing overhead, allocated 135.000 Total cost $630,000 *One-third supervisory salaries; two-thirds 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 15,000 carburetors from the outside supplier? 2. Should the outside supplier's offer be accepted? 3. Suppose that if the carburetors were purchased, Troy Engines, Limited, could use the freed capacity to launch a new product. The segment margin of the new product would be $150,000 per year. Given this new assumption, what would be the financial advantage (disadvantage) of buying 15,000 carburetors from the outside supplier? 4. Given the new assumption in requirement 3, should the outside suppler's offer be accepted? Complete this question by entering your answers in the tabs below. Required Recureda Recures Required 4 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 15,000 carburetors from the outside supplier Required 2 > Exercise 13-3 (Static) Make or Buy Decision (LO13-3) Unit $ 10 10 3 6 Troy Engines, Umited, manufactures a varlety 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 Englnes, Limited, for a cost of $35 per unit . To evaluate this offer, Troy Engines, Limited, has gothered the following information relating to its own cost of producing the carburetor Internally Per 15,000 unit Per Year Direct materials $ 210,000 Direct Labor 150,000 Variable manufacturing overhead 45,000 Fixed manutacuring overhead, traceable 90,000 Fixed manufacturing overhead, allocated 135,000 Total cont 5.42 $ 610,000 *One-third supervisory salarles; two thirds 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 15,000 carburetors from the outside supplier 2. Should the outside supplier's offer be accepted? 3. Suppose that if the carburetors were purchased, Troy Engines, Limited, could use the freed capacity to lounch a new product. The segment margin of the new product would be $150,000 per year. Given this new assumption, what would be the financial advantage (disadvantage) of buying 15,000 carburetors from the outside suppller? 4. Given the new assumption in requirement 3, should the outside supplier's offor be accepted? I Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Should the outsides Required 2 be accepted? Yes No Exercise 13-3 (Static) Make or Buy Decision [LO13-3) Troy Engines, Limited, 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, Limited, for a cost of $35 per unit. To evaluate this offer, Troy Engines, Limited, has gathered the following Information relating to its own cost of producing the carburetor Internally: 15,000 Units Per Year Direct materiala $ 210,000 Direct labor 150,000 Variable manufacturing over head 45,000 Fixed manufacturing overhead, traceable 90,000 Fixed manufacturing overhead, allocated 135,000 Total cost 5.630,000 *One-third supervisory salaries; two-thirds depreciation of special equipment (no resale value). Required: 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 15,000 carburetors from the outside supplier? 2. Should the outside supplier's offer be accepted? 3. Suppose that if the carburetors were purchased, Troy Engines, Limited, could use the freed capacity to launch a new product. The segment margin of the new product would be $150,000 per year. Given this new assumption, what would be the financial advantage (disadvantage) of buying 15,000 carburetors from the outside suppiler? 4. Given the new assumption in requirement 3, should the outside supplier's offer be accepted? Per Unit $ 14 10 3 64 9 5.42 Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required) Required 4 Given the new assumption in requirement 3, should the outside supplier's offer be accepted? Yes NO (Required a