Reference no: EM132552883

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:

Question 1 Qualitative factors aside the 80,000 budgeted level of production, what should NM do - Make the part itself or huy it from the foreign supplier? What is the impact on the company's net income