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Futura Company purchases the 66,000 starters that it instalis in its standard line of farm tractors from a supplier for the price of 51320 per
Futura Company purchases the 66,000 starters that it instalis in its standard line of farm tractors from a supplier for the price of 51320 per unit Due to a reduction in output, the company now has idie capacity that cotid be used to procluce the starters rather than buyng them from an outside supplier. However, the company schief engineer is opposed to making the starters because the proctuction cost per unit is $1410 as shown below. If Futura decides to make the starters, a supervisor would have to be hired (at a solary of $125,400 ) to oversee production. However, the company has sufficient iche tools and machinery such that no new equipcient would have to be purchased. The rent charge above is based on space utitied in the plant The total rent on the plant is $33,000 per period: Depreclation is due to obsolescence rather than wes and tiear Required: What is the financial advabtage (disadvantage) of making the 66.000 starters instead of buying them from an outside supplie
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