Troy Engines, Limited, manufactures a variety of engines for use in heavy equipment. The company has always produced all of the parts for its engines, including the carburetors. An outside supplier offered to sell one type of carburetor to Troy Engines, Limited, for a cost of $37 per unit. To evaluate this offer, Troy Engines, Limited, summarized the cost of producing the carburetor internally as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead, traceable Fixed manufacturing overhead, allocated Total cost Per Unit 23,000 Units Per Year $ 16 9 4 6* $ 368,000 207,000 92,000 138,000 9 207,000 $ 44 $ 1,012,000 *One-third supervisory salaries; two-thirds depreciation of special equipment (no resale value).