Blue Spruce Racers makes bicycles. It has always purchased its bicycle tires from the Blossom Tires at $24 each but is currently considering making the tires in its own factory. The estimated costs per unit of making the tires are as follows:

Direct materials		$8
Direct labor		$5
Variable manufacturing overhead		$7

The companys fixed expenses would increase by $71,000 per year if managers decided to make the tire. (a1) Calculate total relevant cost to make or buy if the company needs 11,100 tires a year.

	Make	Buy
Total relevant cost	$enter a dollar amount	$enter a dollar amount

(a2) Ignoring qualitative factors, if the company needs 11,100 tires a year, should it continue to purchase them from Balyo or begin to produce them internally?

The company select an option should not continueshould continue to purchase the tires.