FiberSystems manufactures an optical switch that it uses in its final product. FiberSystems incurred the following manufacturing costs when it

produced $73,000$ 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, however, another company has offered to sell FiberSystems the

switch for $$11\mathrm{.}50$ per unit. If 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.

FiberSystems

Incremental Analysis for Outsourcing Decision

Data table

$1$