Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. exercise 11-10 make or buy decision (lo11-3) futur

Exercise 11-10 Make or Buy Decision (LO11-3) Futura Company purchases the 55,000 starters that it...

70.2K

Verified Solution

Question

Accounting

image
Exercise 11-10 Make or Buy Decision (LO11-3) Futura Company purchases the 55,000 starters that it installs in its standard line of farm tractors from a supplier for the price of $12.20 per unit. Due to a reduction in output, the company now has idle capacity that could be used to produce the starters rather than buying them from an outside supplier. However, the company's chief engineer is opposed to making the starters because the production cost per unit is $13.00 as shown below. Direct materials Direct labor Supervision Depreciation Variable manufacturing overhead Rent Total production cost Per Unit Total $6.00 3.00 1.70 $ 93,500 1.00 $ 55,000 0.70 0.60 $ 33,000 $13.00 Futura decides to make the starters, a supervisor would have to be hired (at a salary of $93,500) to oversee production. However, the company has sufficient idle tools and machinery such that no new equipment would have to be purchased. The rent charge above is based on space utilized in the plant. The totalrent on the plant is $82,000 per period. Depreciation is due to obsolescence rather than wear and tear Required: What is the financial advantage disadvantage) of making the 55,000 starters instead of buying them from an outside supplier

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Chemistry
1.2K views

11.35 g (about one tablespoon) of table sugar (sucrose, C12H22O11) is dissolved in 242.9 mL of...

Chemistry
1.2K views

1) What alkene(s) will be produced when each of the following alcohols is dehydrated? 2- propanol 2- butanol 2)...

Chemistry
1.2K views

The following information is to be used for the next two questions. Molar absorptivity data for...

Electrical Engineering
1.2K views

(a)Discuss the classification of logic families and their characteristic parameters. (b) Design q mod -6 unit distance...

Biology
1.2K views

4 Analyze ata the don is best Why Part 5 Conclusion Do humans have a...

Biology
1.2K views

Which of the following refers to the process through which monomers are joined together by...

Physics
1.2K views

0 In Young s double slit experiment one of the slit is wider than other...

Physics
1.2K views

A sound source emitting sound of frequency 450 Hz is approaching a stationary observer with...

Calculus
1.2K views

Find the reference angle for the angle 95

Algebra
1.2K views

Amanda invests 500 into an account with a 2 5 interest rate that is compounded...

Accounting
1.2K views

In a standard cost system, an unfavorable overhead volume variance would result if A. Production...

Accounting
1.2K views

Complete Case Study 51 in chapter 19 of the textbook (according to the directions provided...