ch 13 #1

Futura Company purchases n,000 starters trom a supplier ot $10.80 per unit that it installs in rarm tractors. Uue to a reduction in output, the company now has enough idle capacity to produce the starters rather than buying them from the supplier. However, the company's chief engineer is opposed to making the starters because the production cost pet unit is $11.70, as shown below: If Futura decides to make the starters, a supervisor would be hired (at a solary of $120.700 ) to oversee production. However, the company has sufficient idie tools and machinery such that no Iew equipment would have to be purchased. The tent charge above is based on space utilized in the plant The total rent on the plant is $80,000 per period Required: What is the financial advantage (disadvantage) of making the 71,000 starters instead of buying them from an outside supplier