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Lightning Remote Cars manufactures remote control cars for children. Historically, Lightning Remote Cars has manufactured their own tires they sell. However, a tire manufacturer has
Lightning Remote Cars manufactures remote control cars for children. Historically, Lightning Remote Cars has manufactured their own tires they sell. However, a tire manufacturer has recently approached Lightning Remote Cars with an offer to produce their tires for them for $1.40 per tire. Lightning Remote Cars incurs the following costs in the per-unit production of the tires. Management is wondering whether they should accept the offer: $0.25 for direct materials $0.80 for direct labor $0.30 for variable overhead $0.50 for fixed overhead What would be the increase or decrease in per-tire costs if the tires are purchased from the outside supplier? Select one: O a. $0.45 decrease per unit O b. $0.05 increase per unit O c. $0.05 decrease per unit O d. $0.45 increase per unit
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