CoolSystems manufactures an optical switch that it uses in its final product. Produced 68,000 units last year. another company offered to sell their switch for $8.00 per unit.
ystems make or buy the swi Data Table A B 1 Direct materials $ 544,000 102,000 2 Direct labor 68,000 3 Variable MOH 374,000 4 Fixed MOH $ 1,088,000 5 Total manufacturing cost for 68,000 units Done Print He same cost structure, should CoolSystems make or buy the switch? S Complete an incremental analysis to show whether CoolSystems should make or buy the switch make. CoolSystems Incremental Analysis for Outsourcing Decision Make Buy Unit Unit Difference Variable cost per unit: Direct materials Direct labor Variable overhead Purchase price from outsider Total variable cost per unit because the variable cost per unit to make the switch is Decision: Requirement 2. Now, assume that CoolSystems can avoid $99,000 of fixed costs a year by the company do now? Complete an outsourcing decision analysis assuming fixed costs can be avoided by outsourt list or enter any number in the input fields and then continue to the Requirements 1. Given the same cost structure, should CoolSystems make or buy the switch? Show your analysis. 2. Now, assume that CoolSystems can avoid $99,000 of fixed costs a year by outsourcing production. In addition, because sales are increasing, CoolSystems needs 73,000 switches a year rather than 68,000 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? Done Print ayold $99,000 of fixed costs a year by outsourcing Outsourcing Decision Make Buy switches switches Total relevant costs V because the total relevant costs to Decision: Requirement 3. Given the last scenario, what is the most CoolSystems Begin by identifying the basic formula that is used to determine the indi na switches than the ecision: because the total relevant costs to make the switches are equirement 3. Given the last scenario, what is the most CoolSystems would be willing ty pay to outsource the sun Begin by identifying the basic formula that is used to determine the indifferent outsourcing cost per unit Cost if outsourcing switches 11 Cost if making switches Using the basic formula you determined above, solve for the outsourcing cost at which CoolSystems would be 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 list or enter any number in the input fields and then continue to the next question, Requirement 3. Given the last scenario what is com Begin by identifying the basic formula that is to de Cost if making switches Using the basic formula you determined above, solve for the Outsourcing on white CoolSystems would be indifferent between outsourcing and making the watches the song per switch. Therefore, Systems will only be wWing to outsource the decis Choose from any list or enter any number in the input fields and then continue to the most
