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Discuss the company could utilize more of its facility

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Bob's Auto manufactures cars and currently uses only 50% of its manufacturing facility to make 30,000 cars per year. Bob could rent the unused portion of its plant and receive $3,000 a month. Alternatively, the company could utilize more of its facility by producing its own tires. It currently purchases tires at $30 per set of four. If Bob produces the tires, it would incur $12 per set for direct materials, $10 for direct labor, and $24 for overhead (30% is avoidable).

Should the company make or buy the tires?

Reference no: EM131783577

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