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Futura Company purchases the 77,000 starters that it installs in its standard line of farm...

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Accounting

Futura Company purchases the 77,000 starters that it installs in its standard line of farm tractors from a supplier for the price of $12.00 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 $12.70 as shown below:
25 points
References
\table[[,Per Unit,Total],[Direct materials,$5.00,],[Direct labor,3.50,],[Supervision,1.80,$138,600
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