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 the 73,000 starters that...

50.1K

Verified Solution

Question

Accounting

image
Exercise 13-10 (Algo) Make or Buy Decision (LO13-3] Futura Company purchases the 73,000 starters that it installs in its standard line of farm tractors from a supplier for the price of $12.30 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 Direct materials Direct labor Supervision Depreciation Variable manufacturing overhead Rent Total product coat Per Unit Total $6.00 2.80 1.70 $124,100 1.30 $ 94,900 0.50 0.40 $ 29,200 $12.70 If Futura decides to make the starters, a supervisor would have to be hired (at a salary of $124,100) 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 73,000 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

If you wanted an LED to flash more or less in a circuit, how would this...

Electrical Engineering
Q

Find x and y in the parallelogram below Note Input answer as x y A...

Geometry
Q

A child pulls a wagon with a force of 34 pounds. The handle of the...

Basic Math
Q

Verify that the given two parameter family of functions is the general solution of the...

Calculus
Q

A farmer plans to fence a rectangular grazing area adjacent to an existing fence The...

Calculus
Q

1) Comfy Wheels Bus Company produce autobuses. Para producir los asientos de los autobuses, se...

Accounting
Q

Anticipated sales for Safety Grip Company were 38,000 passenger car tires and 11,000 truck tires....

Accounting
Q

\table[[,\table[[Budgeted],[Income],[Statement]],\table[[Direct],[Labor],[Budget]]],[A),Yes,Yes],[B),Yes,No],[C),No,Yes],[D),No,No]] Multiple Choice Choice A Choice B Choice C

Accounting
Q

RJ Corporation has provided the following Information about one of its inventory Items: Date 1/1...

Accounting
Q

Rip Tide Company manufactures surfboards. Its standard cost information follows Standard Standard (Rate) Unit Cost...

Accounting
Q

FIN-250-RS519 Personal Financial Planning 20EWS Jolie Kinyamahanga & 05/12/20 6:59 PM Homework: 2-3 MyFinanceLab: Assignment:...

Finance
Q

1.what are current investment trends 2. what role has venture capitalism played in the...

Finance