BestSystems manufactures an optical switch that it uses in its final product. BestSystems incurred the following manufacturing costs when it produced 67,000 units last year: (Click the icon to view the manufacturing costs.) BestSystems does not yet know how many switches it will need this year; however, another company has offered to sell BestSystems the switch for $10.50 per unit. If BestSystems 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. Read the requirements. Requirement 1. Given the same cost structure, should BestSystems make or buy the switch? Show your analysis. Complete an incremental analysis to show whether BestSystems 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.) BestSystems Incremental Analysis for Outsourcing Decision Make Buy Unit Unit Difference Variable cost per unit: Total variable cost per unit Choose from any list or enter any number in the input fields and then click Check Answer. parts remaining Clear All Check Answer A B 1 Direct materials $ 603,000 2 Direct labor 100,500 3 Variable MOH 134,000 4. Fixed MOH 402,000 5 Total manufacturing cost for 67,000 units $ 1,239,500 1. Given the same cost structure, should BestSystems make or buy the switch? Show your analysis. 2. Now, assume that BestSystems can avoid $102,000 of fixed costs a year by outsourcing production. In addition, because sales are increasing, BestSystems 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 BestSystems would be willing to pay to outsource the switches? 5 parts remaining