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chSystems manufactures an optical switch that it uses in its final product. Tech Systems incurred the following anufacturing costs when it produced 71,000 units last
chSystems manufactures an optical switch that it uses in its final product. Tech Systems incurred the following anufacturing costs when it produced 71,000 units last year: (Click the icon to view the manufacturing costs.) another company has offered to sell TechSystems the switch for $18.50 per unit. If TechSystems buys the switch from the outside supplier, none of the fixed costs are avoidable. The company prepared an outsourcing decision analysis to Show the cost per unit of making the switches versus the cost per unit of buying (outsourcing) the switches. (Click the icon to view the outsourcing decision analysis.) TechSystems needs 78,000 optical switches next year (assume same relevant range). By outsourcing them TechSystems can use its idle facilities to manufacture another product that will contribute $220,000 to operating income, but none of the fixed costs will be avoidable. Should TechSystems make or buy the switches? Show your analysis Complete the B! Data table - Data table A B $ 1 Direct materials 2 Direct labor 3 Variable MOH 781,000 142.000 Tech Systems Incremental Analysis for Outsourcing Decision Make Buy 213,000 Unit Unit Difference 4 Fixed MOH 390,500 Total variable od 5 Total manufacturing cost for 71,000 units $ 1,526,500 $ 11.00 $ Variable cost per unit: Direct materials Direct labor Variable overhead 0.00 $ 0.00 11.00 2.00 2.00 Expected net cd 3.00 0.00 0.00 18.50 3.00 (18.50) Purchase price from outsider Decision Print Done S 16.00 $ 18.50 $ (2.50) Variable cost per unit Print Done Next MacBook Air bil VE 20 SC FA 1 Y $ Y $ 4 % 5 & 7 8 9 1 0 6 2 3 7. 0 W E Q T R Y * F D G H S J
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