Saved Chapter 12 Homework #1 Exercise 12-3 Make or Buy a Component (LO12-3) points 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 sell one type of carburetor to Troy Engines, Ltd., for a cost of $19 per unit. To evaluate this offer, Troy Engines, Ltd., has gathered the following information relating to its own cost of producing the carburetor internally: eBook 14,200 Per Units Unit Per Year $ 5 $ 71,000 7 99,400 28,400 6" 85,200 127,800 Direct materia Direct labor . Variable manufacturing overhead Fixed manufacturing overhead, traceable Fixed manufacturing overhead, allo 2 References Total cost $ 29 $ 411,800 supervisory Salam alaries; 60% depreciation of special equipment (no resale value). Saved Chapter 12 Homework #1 i Required: 1a. Assuming that the company has no alternative use for the facilities that are now being used to produce the carburetors, compute the total cost of making and buying the parts. (Round your Fixed manufacturing overhead per unit rate to 2 decimals.) points Make Buy Total relevant cost (14,200 units) eBook 000 Hint 1b. Should the outside supplier's offer be accepted? Print Accept References Reject points 2a. 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 $49.920 per year. Compute the total cost of making and buying the parts. (Round your Fixed manufacturing overhead per unit rate to 2 decimals.) eBook Hint Make Buy Total relevant cost (14,200 units) Print References 2b. Should Troy Engines, Ltd., accept the offer to buy the carburetors for $19 per unit? Reject Accept