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Futura Company purchases the 68,000 starters that it installs in its standard line of farm tractors frorm a supplier for the price of 51070 per

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Futura Company purchases the 68,000 starters that it installs in its standard line of farm tractors frorm a supplier for the price of 51070 per unit. Due to a reduction in output, the company now has idle capacity that could be used to produce the starters ratber than buying them from an outside supplier. However, the company's chlef engineer is opposed to making the starters because the production cost per unit is $11.70 as shown below: If Futura decides to make the starters, a supervisor would have to be hired (at a salary or $136,000 ) to oversee production. However: the compary has sutficient idle tools and machinery such that no reiv equipinent would have to be purchased. The rent charge above is based on space utilized in the plant. The total rent on the plant is $88.000 per period Depreciation is due to obsolescence rather than wear and teat. Required

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