Please do not give image format Futura Company purchases the 60,000 starters that it installs in its standard line of farm tractors from a supplier for theprice of $11.10 per unit. Due to a reduction in output, the company now has idle capacity that could be used to producethe starters rather than buying them from an outside supplier. However, the company's chief engineer is opposed tomaking the starters because the production cost per unit is $12.20 as shown below:Per UnitTotal$Direct materialsDirect laborSupervisionDepreciationVariable manufacturing overheadRentTotal production cost$6.002.002.001.000.600.6012.20$ 120,000$ 60,000$ 36,000If Futura decides to make the starters, a supervisor would have to be hired (at a salary of $120,000) 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 $84,000 per period.Depreciation is due to obsolescence rather than wear and tear.Required:What is the financial advantage (disadvantage) of making the 60,000 starters instead of buying them from an outsidesupplier?

financial advantage represents a superior financial position or benefit that allows individuals,…

Futura Company purchases the 60,000 starters that it installs in its standard line of farm tra price of $11.10 per unit. Due to a reduction in output, the company now has idle capacity th the starters rather than buying them from an outside supplier. However, the company's chie making the starters because the production cost per unit is $12.20 as shown below: Per Unit Total