Problem 5 (Textbook Reference: P6-6)-Decide whether to make or buy a product Skate-Rig t Company, a skateboard manufacturer, is currently operating at 60% capacity and producing about 8,000 units a month. To use more capacity, the manager has been considering the research and development department's suggestion that the company manufacture its own wheels. Currently the company purchases wheels from a supplier at a unit price of $20. (Each unit is a set of wheels for a skateboard.) Estimates show the company can manufacture its own wheels at $10 for direct materials costs and $4 for direct labor cost per unit. The variable factory overhead is $1 per unit. The company's accountants would probably allocate another $6 per unit to the wheels. Required: a. Should Skate-Right make or buy the wheels? SKATE RIGHT COMPANY Relevant Revenues and Expenses Buy MakeDiffe rential Purchase cost Direct materials Direct labor Factory overhead Net advantage (disadvantage) of making wheels WHEELS: MAKE OR BUY (circle your answer) ake the wheels for $360,000 annually. How would b. Suppose Skate-Right could r this affect your decision in (a), if at all