Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

BestSystems manufactures an optical switch that it uses in its final product. BestSystems incurred BestSystems does not yet know how many switches it will need

image text in transcribedimage text in transcribedimage text in transcribed

BestSystems manufactures an optical switch that it uses in its final product. BestSystems incurred BestSystems does not yet know how many switches it will need this year; however, the following manufacturing costs when it produced 66,000 units last year: another company has offered to sell BestSystems the switch for $8.50 per unit. If (Click the icon to view the manufacturing costs.) 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 Read the 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. Use a minus sign or parentheses when the cost to buy exceeds the cost to make.) Data table Requirements 1. Given the same cost structure, should BestSystems make or buy the switch? Show your analysis. 2. Now, assume that BestSystems can avoid $100,000 of fixed costs a year by outsourcing production. In addition, because sales are increasing, BestSystems needs 71,000 switches a year rather than 66,000 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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Handbook Of Energy Audits

Authors: Albert Thumann, Terry Niehus, William J. Younger

8th Edition

1439821453, 978-1439821459

More Books

Students also viewed these Accounting questions

Question

12.6 Analyze the emerging emphasis on employee recognition.

Answered: 1 week ago