Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. futura company purchases the 66,000 starters that

Futura Company purchases the 66,000 starters that it installs in its standard line of farm...

80.2K

Verified Solution

Question

Accounting

image

Futura Company purchases the 66,000 starters that it installs in its standard line of farm tractors from a supplier for the price of $10.10 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 $10.20 as shown below: 20 points Total Direct materials Direct labor Supervision Depreciation Variable manufacturing overhead Rent Total product cost eBook Per Unit $ 4.00 2.50 1.60 1.20 0.60 0.30 $10.20 $105,600 $ 79,200 $ 19,800 Ask Print If Futura decides to make the starters, a supervisor would have to be hired (at a salary of $105,600) 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 $85,000 per period. Depreciation is due to obsolescence rather than wear and tear. References Required: What is the financial advantage (disadvantage) of making the 66,000 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

Basic Math
1.2K views

Consider the following orthogonal set of vectors v V Find the following values v 1...

Basic Math
1.2K views

A consumer product testing organization uses a survey of readers to obtain customer satisfaction ratings for...

Civil Engineering
1.2K views

QUESTION 3: POST INDUSTRIAL REVOLUTION PLANNING “Lewis Mumford was a visionary thinker who promoted ideas that...

Biology
1.2K views

An assumption for the use of molecular clocks is that neutral mutations accumulate at a...

Accounting
1.2K views

Information pertaining to the inventory of Palette Company follows. The company has...

Accounting
1.2K views

Bank Reconciliation The following data were accumulated for...

Accounting
1.2K views

Although Deborah Adefowope has run a small business for many years, she has never kept...

Accounting
1.2K views

The statement of income of Riverbed Inc. for the year ended December 31,2024, reported the...

Accounting
1.2K views

3:58 X Fall 2019 ACC3100 Practice Exam.pdf .. 1 of 4 ACC 3100 Fall 2019...

Accounting
1.2K views

For purposes of substantiation of mileage for the vehicle expense, a sole proprietor in business...

Accounting
1.2K views

Under the accrual basis of accounting, adjusting entries are a. not needed. b. only needed...

Accounting
1.2K views

Brarin Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations...