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CoolSystems manufactures an optical switch that it uses in its final product CoolSystems incurred the following manufacturing costs when it produced 72,000 units last year (Cack the icon to view the manufacturing costs.) Read the requirements CoolSystems does not yet know how many switches it will need this year, however, another company has offered to sell CoolSystems the switch for $1300 per unit. If CoolSystems 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 0.00 13 00 15.00 $ Purchase price from outsider (13.00) 13.00 $ 2.00 Total variable cost per unt Decision Buy the optical switch because the variable cost per unt to make the switch is greater than the variable cost per unit to buy the switch Requirement 2. Now, assume that CoolSystems can avoid 5110,000 of fixed costs a year by outsourcing production In addition because sales are increasing, CoolSystems 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 eded have increased CoolSystems Outsourcing Decision Make Buy switches switches Total variable costs Fixed cost per unit Fixed costs Total relevant costs Data Table A B 1 Direct materials $ 792,000 2 Direct labor 72,000 3 Variable MOH 216,000 4. Fixed MOH 432,000 5 Total manufacturing cost for 72,000 units $ 1,512,000 Requirements 1. Given the same cost structure, should CoolSystems make or buy the switch? Show your analysis. 2. Now, assume that CoolSystems can avoid $110,000 of fixed costs a year by outsourcing production. In addition, because sales are increasing, CoolSystems needs 77,000 switches a year rather than 72,000 switches. What should the company do now? 3. Given the last scenario, what is the most CoolSystems would be willing to pay to outsource the switches