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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 S45 per unit. To evaluate this offer, Troy Engines, Ltd., has gathered the following information relating to its own cost of producing the carburetor internally 15,100 Units Per Unit Per Year Direct materials $ 13 $ 196,300 Direct labor 15 226,500 Variable manufacturing overhead 1 15.100 Fixed manufacturing overhead, traceable 9* 135.900 Fixed manufacturing overhead, allocated 17 256,700 Total cost $ 55 $ 830.500 *40% supervisory salaries, 60% depreciation of special equipment (no resale value). 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.) Make Buy Total relevant cost (15,100 units) 1b. Should the outside supplier's offer be accepted? O Reject O Accept 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 $205,240 per year. Compute the total cost of making and buying the parts. (Round your Fixed manufacturing overhead per unit rate to 2 decimals.) Make Buy Total relevant cost (15,100 units) 2b. Should Troy Engines, Ltd., accept the offer to buy the carburetors for $45 per unit? O Reject Accept

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