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Continental manufactures 10,000 car tires annually. The cost breakdown per tire is as follows: Direct materials: 20 Direct labor: 15 Variable manufacturing overhead: 10 Fixed

Continental manufactures 10,000 car tires annually. The cost breakdown per tire is as follows:

Direct materials: €20
Direct labor: €15
Variable manufacturing overhead: €10
Fixed manufacturing overhead: €5

Bridgestone offers to sell 10,000 tires at €48 each. Accepting the offer will reduce Continental's fixed overhead by €20,000.

Conduct a differential analysis to determine if Continental should make or buy the tires.
Calculate the overall cost impact if the offer is accepted.

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