Abdullah Motors manufactures cars and currently uses only 50% of its manufacturing facility (20,000 cars).

The company could utilize more of its facility by producing its own tires and using the total capacity. It currently purchases tires at $30 per unit. Abdullah would incur $12 per unit for direct materials, $10 for direct labor, and $24 for overhead (which is 30% variable) if it produces the tires.

a. Should Abdullah Motors make or buy the tires? Provide calculations that support your answer.

b. Suppose Abdullah Motors could rent the unused portion of its plant and receive $1,500 a month. Should the company make or buy the tires? Provide calculations that support your answer