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: (Click 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 $14.00 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. Requirement 1. Given the same cost structure, should CoolSystems make or buy the switch? Show your analysis. 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 Variable cost per unit Total variable cost per unit Decision: Make Unit Buy Unit Difference because the variable cost per unit to make the switch is than the variable cost per unit to buy the switch Requirement 2. Now, assume that CoolSystems can avoid $106.000 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 an CoolSy Outsourcing Data table ts needed have increased. Total relevant costs Decision: Requirement 3. Given the last scen Begin by identifying the basic formul Cost if making switche 1 Direct materials 2 Direct labor 3 Variable MOH 4 Fixed MOH $ 576.000 72.000 216.000 396,000 5 Total manufacturing cost for 72.000 units $ 1,250,000 osts to buy the switches Print Done Using the basic formula you determined above, solve for the outsourcing cost at which CoolSystems would be indifferent between outsourcing and making the switches. (Enter your per unit calculation to the nearest cent.) CoolSystems would be indifferent between outsourcing and making the switches if the outsourcing cost was per switch. Therefore, Systems will only be willing to outsource if the outsourcing cost is per switch