Answered step by step
Verified Expert Solution
Question
1 Approved Answer
FiberSystems manufactures an optical switch that it uses in its final product. FiberSystems FiberSystems does not yet know how many switches it will need this
FiberSystems manufactures an optical switch that it uses in its final product. FiberSystems FiberSystems does not yet know how many switches it will need this year; however. incurred the following manufacturing costs when it produced 74,000 units last year: another company has offered to sell FiberSystems the switch for $17.00 per unit. If (Click the icon to view the manufacturing costs.) FiberSystems 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 FiberSystems make or buy the switch? Show your analysis. Complete an incremental analysis to show whether FiberSystems should make or buy the switch. (Enter a "0" 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.) Data table Requirements 1. Given the same cost structure, should FiberSystems make or buy the switch? Show your analysis. 2. Now, assume that FiberSystems can avoid $105,000 of fixed costs a year by outsourcing production. In addition, because sales are increasing, FiberSystems needs 79,000 switches a year rather than 74,000 switches. What should the company do now? 3. Given the last scenario, what is the most FiberSystems would be willing to pay to outsource the switches
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started