BestSystems manufactures an optical switch that it uses in its final product. BestSystems incurred the following manufacturing costs when it produced 69,000 units last year: E: (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 $15.50 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 "O" 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 i Data Table Make Buy Unit Unit Difference $ Direct materials Direct labor Variable cost per unit: Requirements 690,000 69,000 138,000 448,500 Variable MOH Fixed MOH $ 1,345,500 Total manufacturing cost for 69,000 units Total variable cost per unit 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 74,000 switches a year rather than 69,000 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? Print Done Print Done