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Futura Company purchases 78,000 starters from a supplier at $11.50 per unit that it installs...

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Accounting

Futura Company purchases 78,000 starters from a supplier at $11.50 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 unlt is $12.20, as shown below:
\table[[,Per Unit,Total],[Direct materials,$6.00,],[Direct labor,2.50,],[Supervision,1.40,$109,200
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