Assume a company manufactures cars and currently uses only 50% of its manufacturing facility 20,000 cars. The company could utilize more of its facility by producing its own tires. It currently purchases tires at SAR 30 per set of four. If the company would incur SAR12 per set for direct materials, SAR10 for direct labor, and SAR 6 for overhead (variable) to produce the tires.

Required: 

Compute why the company should, make or buy the tires, in any scenario give your decision why?

Answer rating: 100% (QA)

To determine whether the company should make or buy the tires we need to compare the cost of p... View the full answer