Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. exercise 13-10 (algo) make or buy decision [lo13-3

Exercise 13-10 (Algo) Make or Buy Decision [LO13-3] Futura Company purchases...

80.2K

Verified Solution

Question

Accounting

image
Exercise 13-10 (Algo) Make or Buy Decision [LO13-3] Futura Company purchases the 61,000 starters that it installs in its standard line of farm tractors from a supplier for the price of $13.90 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 $14.60 as shown below: If Futura decides to make the starters, a supervisor would have to be hired (at a salary of $122,000 ) 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 total rent on the plant is $88,000 per period. Depreciation is due to obsolescence rather than wear and tear. Required: What is the financial advantage (disadvantage) of making the 61,000 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: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

A speculator purchases a put option for a premium of $2.75, with an exercise price of...

Finance
Q

The switch in the network in Fig. E7.17 opens at t=0. Find i(t) for t>0

Electrical Engineering
Q

Equipment costing $590,000 with an expected useful life of 10 years and an expected salvage value...

Accounting
Q

Choose the term that describes a virus that has a membranous outer covering over its...

Biology
Q

For the amplifier in Fig P4 15 find the gain R1 4 1 KQ R2...

Basic Math
Q

For what angles ? between 0 and 360 is cos ?= sin ? true?The angle...

Basic Math
Q

FEDERAL TAXES Your client is...

Accounting
Q

The current assets and liabilities sections of the comparative balance shests of Wilthorse Inc, a...

Accounting
Q

Juan owns a business that acquires exotic automobiles that are high-tech, state-of-the-art vehicles with unique...

Accounting
Q

Accounting
Q

this is from professional selling subject pleasw write in typing and a unique answer -->...

Finance
Q

In the U.S. alone, roughly 500 million computers will become obsolete by 2017. These computers...

Finance