Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Best Systems manufactures an optical switch that it uses in its final product. Another company has offered to sell Best Systems the switch for

image text in transcribed

Best Systems manufactures an optical switch that it uses in its final product. Another company has offered to sell Best Systems the switch for $23 00 per unit None of Best's fixed costs are avoidable. (Click the icon to view the outsourcing decision.) Requirement 1. Identify the expected net costs that Best Systems will incur to acquire 82,000 switches under three alternative plans. Outsource switches Best Systems needs 82 000 optical switches. By outsourcing them, Best Systems can use its idle facilities to manufacture another product . that will contribute $220,000 to operating income. Switch costs Variable costs: Direct materials Direct labor Variable manufacturing overhead Purchase cost Expected profit contribution from the other product Total expected net cost of the optical switches Make Facilities Idle Make new product Read the Leguirements_ Data table Variable costs: Direct materials Direct labor Variable overhead Make optical switch Outsource optical switch Difference (MakeOutsource) 9.00 3.50 8.00 20 50 $ 23.00 23.00 $ 9.00 3_50 8.00 (23_00) (2_50) Purchase price from outsider S Differential cost per unit Requirements . Identify the expected net costs that Best Systems will incur to acquire 82000 switches under three alternative plans: make the switches, buy the switches and leave facilities Idle, buy the switches and use the idle facilities to make another product. 2. Which plan makes the best use of Best System's facilities? Support your answer print Help me solve this Etext pages Get more help A Done Check answer

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Introduction To Management Accounting A User Perspective

Authors: Michael L Werner, Kumen H Jones

2nd Edition

0130327506, 9780130327505

More Books

Students also viewed these Accounting questions