Best Systems manufactures an optical switch that it uses in its final product. Best Systems incurred the following manufacturing costs when it produced 73,000 units last year: (Click the icon to view the manufacturing costs.) Another company has offered to sell Best Systems the switch for $13.30 per unit. Best Systems prepared an outsourcing decision analysis to show the cost per unit of making the switches versus the cost per unit of buying (outsourcing) the switches. (Click the icon to view the outsourcing decision analysis.) Best Systems needs 87,000 optical switches next year (assume same relevant range). By outsourcing them, Best Systems can use its idle facilities to manufacture another product that will contribute $230,000 to operating income, but none of the fixed costs will be avoidable. Should Best Systems make or buy the switches? Show your analysis. Complete the Best Use of Facilities Analysis. (Round unit costs to the nearest cent as needed. If Best Systems Best Use of Facilities Analysis Total variable cost of obtaining the optical switches Make Expected profit contribution from the other product Expected sales price of the other product Fixed unit cost of obtaining the optical switches Variable unit cost of obtaining the optical switches Buy and Use Facilities for Other Product Outsourcing decision analysis Variable cost per unit: Direct materials Direct labour Variable overhead Purchase price from outsider Variable cost per unit Best Systems Outsourcing Decision Make Unit $ Print 7.40 1.70 2.60 $ 11.70 $ Buy Unit Done Cost to Make Minus Cost to Buy 13.30 13.30 $ 7.40 1.70 2.60 (13.30) (1.60) - X Jar all Check answer Best Systems manufactures an optical switch that it uses in its final product. Best Systems incurred the following manufacturing costs when it produced 73,000 units last year: (Click the icon to view the manufacturing costs.) Another company has offered to sell Best Systems the switch for $13.30 per unit. Best Systems prepared an outsourcing decision analysis to show the cost per unit of making the switches versus the cost per unit of buying (outsourcing) the switches. (Click the icon to view the outsourcing decision analysis.) Best Systems needs 87,000 optical switches next year (assume same relevant range). By outsourcing them, Best Systems can use its idle facilities to manufacture another product that will contribute $230,000 to operating income, but none of the fixed costs will be avoidable. Should Best Systems make or buy the switches? Show your analysis. Complete the Best Use of Facilities Analysis. (Round unit costs to the nearest cent as needed. If a box is not used in the table, leave the box empty; do not enter a zero.) Best Systems Best Use of Facilities Analysis Total variable cost of obtaining the optical switches Expected net cost of obtaining the optical switches X Make ***** Buy and Use Facilities for Other Product Manufacturing costs Direct materials Direct labour. Variable overhead Fixed overhead Total manufacturing cost for 73,000 units Print Done $ $ 540,200 124,100 189,800 465,000 1,319,100 X