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Exercise 13-10(Algo) Sourcing Decisions [LO13-3] Futura Company purchases 74,000 starters from a supplier...

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Accounting

Exercise 13-10(Algo) Sourcing Decisions [LO13-3]
Futura Company purchases 74,000 starters from a supplier at $12.70 per unit that it installs in farm tractors. Due to a reduction in output, the company now has enough idle capacity to produce the starters rather than buying them from the supplier. However, the company's chief engineer is opposed to making the starters because the production cost per unit is $13.10, as shown below:
\table[[,Per Unit,Total],[Direct materials,$7.00,],[Direct labor,2.20,],[Supervision,1.60,$118,400
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