Question
national motors (nm) manufactures cars and produce tires themselves. the following manufacturing costs are incurred per tire based on budgeted production of 80,000 tires per
national motors (nm) manufactures cars and produce tires themselves. the following manufacturing costs are incurred per tire based on budgeted production of 80,000 tires per year direct materials $38.00 direct labour $30.00 variable manufacturing overhead $16 fixed manufacturing costs overhead $20 total $ 104 A supplier has approached NM to supply the tires for $95 per unit. Discontinuing the production of the tires would result in layoof of some salaried employees which will create a reduction 30% of the fixed factory overhead. It has also been determined that some freed up in the manufacturing area could be rented out to outsiders for storage at annual fee of $40,000.Required: 1 Qualitative factors aside the 80,000 budgeted level of production, whay should NM do - Make the part itself or huy it from the foreign supplier? What is the impact on the company's net income
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