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CoursHeroTranscribedText: Question 3- Make or Buy Q 3) Bow Valley Bicycles has been manufacturing its own wheels for its bikes. The company is currently operating at 100% capacity, and variable manufacturing overhead is charged to production at the rate of 50% of direct labor cost. The direct materials and direct labor cost per unit to make the wheels are $5.00 and $5.60 respectively. Normal production is 100,000 wheels per year. A supplier offers to make the wheels at a price of $10 each. If the bicycle company accepts this offer, all variable manufacturing costs will be eliminated. Required: a. Prepare an incremental analysis for the decision to make or buy the wheels. b. Should Sarasota Bicycles buy the wheels from the outside supplier? Justify your