CoolSystems manufactures an optical switch that it uses in its final product. CoolSystems incurred the following manufacturing costs when it produced 70,000 units last year: Ell (Click the icon to view the manufacturing costs.) CoolSystems does not yet know how many switches it will need this year; however, another company has offered to sell CoolSystems the switch for S16.50 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 avoldable Read the requirements. Complete an incremental analysis to show whether CoolSystems 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.) CoolSystems Incremental Analysis for Outsourcing Decision Requirements Make Buy Unit Unit Difference 1. Given the same cost structure, should CoolSystems make or buy the switch? Variable cost per unit: Show your analysis Direct materials Direct labor Variable overhead Purchase price from outsider Total variable cost per unit 9.00 $ 1.00 3.00 0.00 13.00 0.00 $ 0.00 0.00 9.00 1.00 3.00 16.50) 2. Now, assume that CoolSystems can avoid $105,000 of fixed costs a year by outsourcing production. In addition, because sales are increasing CoolSystems needs 75,000 switches a year rather than 70,000 switches. What should the company do now? 16.50 3. Given the last scenario, what is the most CoolSystems would be willing to pay to outsource the switches? 16.50 $ Print Done Choose from any list or enter any number in the input fields and then click Check Answer. CoolSystems manufactures an optical switch that it uses in its final product. CoolSystems incurred the following manufacturing costs when it produced 70,000 units last year: EEB (Click the icon to view the manufacturing costs.) CoolSystems does not yet know how many switches it will need this year; however, another company has offered to sell CoolSystems the switch for S16.50 per unlt. 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 Read the requirements. 70,000 switches. What should the company do now? Complete an outsourcing decislon analysls assuming fixed costs can be avolded by outsourcing production and the number of units needed have increased CoolSystems Requirements Outsourcing Decision Make Buy switches switches 1. Given the same cost structure, should CoolSystems make or buy the switch? Show your analysls. 2. Now, assume that CoolSystems can avold $105,000 of fxed costs a year by outsourcing production. In addition, because sales are increasing CoolSystems needs 75,000 switches a year rather than 70,000 switches. What should the company do now? Contribution margin per unit Flxed costs Fixed cost per unit Total variable costs Units needed Variable cost per unit 3. Given the last scenario, what is the most CoolSystems would be willing to pay to outsource the switches? Print Done number in the input fields and then click Check
