Exercise $13-10($Algo$)$ Make or Buy Decision $[$LO$13-3]$

Futura Company purchases the $68,000$ starters that it installs in its standard line of farm tractors from a supplier for the price of $$12\mathrm{.}50$

per unit. The company is looking at making the product instead of buying from an outside supplier. However, the company's chief

engineer is opposed to making the starters because the production cost per unit is $$13\mathrm{.}00$ as shown below:

If Futura decides to make the starters, a supervisor would have to be hired $($at a salary of $$129,200)$ to oversee production.

$**$ The company has sufficient idle tools and machinery such that no new equipment would have to be purchased.

$***$ The rent charge is the amount that would be allocated to this product based on space utilized in the plant. The total rent on the

plant is $$87,000$ per period.

Required:

What is the financial advantage $($disadvantage$)$ of making$\_$the $68,000$ starters instead of buying them from an outside supplier?