Any help would be appreciated. Thank you!

Janeiro Skate, Inc. currently manufactures the wheels that it uses for its in-line skates. The annual costs to manufacture the 150,000 wheels needed each year are as follows: Total Cost Direct materials $165,000 Direct labor 45,000 Variable manufacturing overhead 60,000 Fixed manufacturing overhead 300,000 Total $570,000 Kasba Rubber Company has offered to provide Janeiro with all of its annual wheel needs for $3.50 per wheel. If Janeiro accepts this offer, 75% of the xed manufacturing overhead above could be totally eliminated. Also, Janeiro would be able to rent out the freed up space and could generate $72,000 of income annually. Assume that direct labor is a variable cost. Required: Based on this information, would Janeiro be nancially better off to continue making the wheels or to buy them from Kasba