BestSystems manufactures an optical switch that it uses in its final product. BestSystems incurred the following manufacturing costs when it produced 72,000 units last year: (Click the icon to view the manufacturing costs.) Read the requirements. BestSystems does not yet know how many switches it will need this year; however, another company has offered to sell BestSystems the switch for $18.00 per unit. If BestSystems buys the switch from the outside supplier, the manufacturing fac that will be idle cannot be used for any other purpose, yet none of the fixed costs are avoidable. 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. Us BestSystems Incremental Analysis for Outsourcing Decision Variable cost per unit: Make Unit Buy Unit Difference Total variable cost per unit Decision: because the variable cost per unit to make the switch is than the variable cost per unit to buy the switch. Data table A B 1 Direct materials S 720,000 2 Direct labor 180,000 3 Variable MOH 216,000 4 Fixed MOH 396,000 5 Total manufacturing cost for 72,000 units $ 1,512,000 Print Done Requirement 2. Now, assume that BestSystems can avoid $104,000 of fixed costs a year by outsourcing production. In addition, because sales are increasing, BestSystems needs 77,000 switches a year rather than 72,000 switches. What should the company do now? Complete an outsourcing decision analysis assuming fixed costs can be avoided by outsourcing production and the number of units needed have increased. BestSystems Outsourcing Decision Make switches Buy switches Activate Windows