FiberSystems manufactures an optical switch that it uses in its final product. FiberSystems incurred the

following manufacturing costs when it produced $68,000$ units last year:

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

Another company has offered to sell FiberSystems the switch for $$9\mathrm{.}50$ per unit. If FiberSystems buys

the switch from the outside supplier, none of the fixed costs are avoidable. The company prepared an

outsourcing decision analysis to show the cost per unit of making the switches versus the cost per unit

of buying $($outsourcing$)$ the switches.

$($Click the icon to view the outsourcing decision analysis.$)$

FiberSystems needs $83,000$ optical switches next year $($assume same relevant range$).$ By

outsourcing them, FiberSystems can use its idle facilities to manufacture another product that

will contribute $$120,000$ to operating income, but none of the fixed costs will be avoidable.

Should FiberSystems make or buy the switches? Show your analysis.

Complete the Best Use of Facilities Analysis. $($Enter a $"0"$ for any zero amounts.$)$

FiberSystems

Best Use of Facilities Analysis

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