Answer the Parts A and B: PART A Fibre Systems Inc. manufactures an optical switch that it uses in its final product. The company incurred the following manufacturing costs when it produced 70,000 optical switches last year: Direct materials $630,000 Direct labour 105,000 Variable overhead 140,000 Fixed overhead 455,000 Total manufacturing costs for 70,000 units $1,330,000 Fiber Systems does not yet know how many switches it will need this year. However, another company has offered to sell Fiber Systems the switch for $14 per unit. Required: 1. Assume that if Fiber Systems buys the switch from the outside supplier, the manufacturing facilities that become idle cannot be used for any other purpose. Also assume that none of the fixed costs are avoidable. Should Fiber Systems buy or continue making the switches? Show your analysis. 2. Now, assume Fiber Systems can avoid $100,000 of fixed costs a year by purchasing outside. In addition, because sales are increasing, Fiber Systems needs 75,000 switches a year rather than 70,000. What should Fiber Systems do now? Show your analysis. PART B Fit Time Inc. produces two types of exercise treadmills, regular and deluxe. The exercise craze is such that Fit Time could use all of its available machine hours producing either model. The two models are processes in the same department. Information on the two models is as follows: e eerUNT | Deluxe Regular Sales price $990 S560 Costs Direct materials Direct labour _E Variable manufacturing overhead Total variable costs SSO Total fixed costs are $100,000 which are all unavoidable. Each deluxe model takes 2.5 hours to produce, and each regular model takes 1.5 hours to produce. Fit Time has 2,000 machine hours available. Required: 1. What is the optimal product mix? What is the expected total CM at this optimal product mix? 2. Assume demand for the Regular model is limited to 800 units Deluxe model is limited to 600 units. What is the optimal product mix? What is the expected total CM at this optimal product mix