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Leo's Tires is considering buying the tires it uses in the manufacture of remote-controlled cars from an outside vendor. Currently, Leo's Tires makes the wheels

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Leo's Tires is considering buying the tires it uses in the manufacture of remote-controlled cars from an outside vendor. Currently, Leo's Tires makes the wheels in its own manufacturing facility. Leo's Tires can buy the tires from an outside supplier for $1.15 each. The company uses 450,000 tires each year. Information about Leo's Tires cost to manufacture the 450,000 tires is as follows: Per Unit Total Direct Material $0.50 $225,000 Direct Labour $0.10 $45,000 Variable Overhead $0.40 $180,000 Fixed Overhead $0.25 $112.500 Total $1.25 $562,500 Fixed cost for Leo's Tires would not change if the company stopped making the tires. Required: Prepare a relevant cost schedule that indicates whether Leo's Tires should buy the tires from the outside supplier or continue to make them. ALL CALCULATIONS MUST BE SHOWN B paragraph

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