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all requirements please!! WorldSystems manufactures an optical switch that it uses in its final product. WorldSystems incurred the following manufacturing costs when it produced 67,000
all requirements please!!
WorldSystems manufactures an optical switch that it uses in its final product. WorldSystems incurred the following manufacturing costs when it produced 67,000 units last year: WorldSystems does not yet know how many switches it will need this year; however, another company has offered to sell WorldSystems the switch for $14.00 per unit. If WorldSystems buys the switch from the outside supplier, the manufacturing facilities that will be idle cannot be used for any other purpose, yet none of the fixed costs are avoidable. (Click the icon to view the manufacturing costs.) Requirement 1. Given the same cost structure, should World Systems make or buy the switch? Show your analysis. Complete an incremental analysis to show whether World Systems should make or buy the switch. (Enter a "0" for any zero amounts. Round amounts to the nearest cent. Use a minus sign or parentheses when the cost to buy exceeds the cost to make.) WorldSystems Incremental Analysis for Outsourcing Decision Make Buy Unit Unit Difference Variable cost per unit: Requirements 1. Given the same cost structure, should World Systems make or buy the switch? Show your analysis. 2. Now, assume that WorldSystems can avoid $110,000 of fixed costs a year by outsourcing production. In addition, because sales are increasing, WorldSystems needs 72,000 switches a year rather than 67,000 switches. What should the company do now? 3. Given the last scenario, what is the most World Systems would be willing to pay to outsource the switches? Data table A 1 Direct materials 2 Direct labor 3 Variable MOH 4 Fixed MOH 5 Total manufacturing cost for 67,000 units $ $ B 737,000 100,500 201,000 368,500 1,407,000 WorldSystems Incremental Analysis for Outsourcing Decision Make Buy Unit Unit Variable cost per unit: Total variable cost per unit DifferenceStep by Step Solution
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