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Futura Company purchases the 7 3 , 0 0 0 starters that it installs in its standard line of farm tractors from a supplier for
Futura Company purchases the starters that it installs in its standard line of farm tractors from a supplier for the price of er unit. Due to a reduction in output, the company now has idle capacity that could be used to produce the starters rather than uying them from an outside supplier. However, the company's chief engineer is opposed to making the starters because the roduction cost per unit is as shown below: Futura decides to make the starters, a supervisor would have to be hired at a salary of to oversee production. However, e company has sufficient idle tools and machinery such that no new equipment would have to be purchased. The rent charge above based on space utilized in the plant. The total rent on the plant is per period. Depreciation is due to obsolescence rather lan wear and tear. equired: That is the financial advantage disadvantage of making the starters instead of buying them from an outside supplier?
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