1 B QUESTION 2 - MAKE VS BUY (15 marks) e D E F G H 2 National Motors (NM) manufactures cars and produce tires themselves. 3 The following manufacturing costs are incurred per tire based on budgeted production of 80,000 tires per year: 4 Per Tire 5 Direct Materials $38.00 Direct Labour 30.00 Variable manufacturing overhead 16.00 Fixed manufacturing overhead 20.00 Total $104.00 A supplier has approached NM to supply the tires for $95 per unit. iscontinuing the production of the tires would result in layoff of some salaried employees which will create a reduction of 30% of the fixed factory overhead has also been determined that some space freed up in the manufacturing area could be rented out to outsiders for storage at an annual fee of $40,000. quired: Qualitative factors aside, at the 80,000 budgeted level of production, what should NM do-make the part itself or buy it from the foreign supplier It is the impact on the company's net income? (Show your detailed analysis and decision). (8 marks)