CoolSystems manufactures an optical switch that it uses in its final product. CoolSystems incurred the following manufacturing costs when it produced 73,000 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 $13.00 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. Decision: because the variable cost per unit to make the switch is than the variable cost per unit to buy the switch. Data table 730,000 182,500 146,000 511,000 $ 1,569,500 Total manufacturing cost for 73,000 units Requirements 1. Given the same cost structure, should CoolSystems make or buy the switch? Show your analysis. 2. Now, assume that CoolSystems can avoid $95,000 of fixed costs a year by outsourcing production. In addition, because sales are increasing, CoolSystems needs 78,000 switches a year rather than 73,000 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? Direct materials Direct labor Variable MOH Fixed MOH Print Done Print Done