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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
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
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