Exercise $11-10$ Make or Buy Decision $[$LO$11-3]$

Futura Company purchases the $65,000$ starters that it installs in its standard line of farm tractors from a supplier for the price of $$9\mathrm{.}60$ per unit. Due to a reduction in output, the company now has idle capacity that could be used to produce the starters rather than buying them from an outside supplier. However, the company's chief engineer is opposed to making the starters because the production cost per unit is $$9\mathrm{.}90$ as shown below:

$\backslash$table$[[,$Per Unit,Total$],[$Direct materials,$$4\mathrm{.}00,],[$Direct labor,$2\mathrm{.}20,],[$Supervision$,1\mathrm{.}70,$$$110,500$