$$curred the following manufacturing costs when it produced $74,000$ units last year:

$($Click the icon to view the manufacturing costs.$)$

Read the requirements.

FiberSystems does not yet know how many switches it will need this year; ho another company has offered to sell FiberSystems the switch for $$9\mathrm{.}50$ per ur FiberSystems buys the switch from the outside supplier, the manufacturing fa will be idle cannot be used for any other purpose, yet none of the fixed costs avoidable.

Decision: Buy the optical switch because the variable cost per unit to make the switch is greater than the variable cost per unit to buy the switch.

Requirement $2.$ Now, assume that FiberSystems can avoid $$104,000$ of fixed costs a year by outsourcing production. In addition, because sales are increasing, FiberSystems needs $79,0$ witches a year rather than $74,000$ switches. What should the company do now?

Complete an outsourcing decision analysis assuming fixed costs can be avoided by outsourcing production and the number of units needed have increased.

FiberSystems

Outsourcing Decision

$\backslash$table$[[$Units needed,$\backslash$table$[[$Make$],[$switches$],[$switches$]]],[$Variable cost per unit,$],[$Contributigmmargin per unit,$],[$Total relevant costs,$]]$