Global Systems

GlobalSystems

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

GlobalSystems

incurred the following manufacturing costs when it produced

69,000

units last year:

Global Systems manufactures an optical switch that it uses in its final product. GlobalSystems incurred the following manufacturing costs when it produced 69,000 units last year: B (Click the icon to view the manufacturing costs.) Global Systems does not yet know how many switches it will need this year; however, another company has offered to sell GlobalSystems the switch for $17.00 per unit. If GlobalSystems 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. Read the requirements. -X Data table A B 1 Direct materials $ Direct materials 759,000 $ 11.00 $ 0.00 $ 11.00 2 Direct labor 2.50 Direct labor 172,500 0.00 2.50 Variable overhead 1.00 0.00 1.00 3 Variable MOH 69,000 0.00 17.00 (17.00) 4 Fixed MOH Purchase price from outsider 448,500 $ 14.50 $ 17.00 $ (2.50 $ 5 Total manufacturing cost for 69,000 units 1,449,000 Total variable cost per unit Requirement 2. Now, assume that Global Systems can avoid $99,000 of fixed costs a year by outsourcing production. In addition, because sales are increasing, GlobalSystems needs 74,000 switches a year rather than 69,000 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. GlobalSystems Outsourcing Decision W #3 Question 1, E8-48B Part 3 of 6 Contribution margin per unit Fixed costs fitch that it uses in its final product. Global Systems incurred the uced 69,000 units last year: ng costs.) Fixed cost per unit Total variable costs Units needed Variable cost per unit Total relevant costs Global Systems manufactures an optical switch that it uses in its final product. GlobalSystems incurred the following manufacturing costs when it produced 69,000 units last year: B (Click the icon to view the manufacturing costs.) Global Systems does not yet know how many switches it will need this year; however, another company has offered to sell GlobalSystems the switch for $17.00 per unit. If GlobalSystems 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. Read the requirements. -X Data table A B 1 Direct materials $ Direct materials 759,000 $ 11.00 $ 0.00 $ 11.00 2 Direct labor 2.50 Direct labor 172,500 0.00 2.50 Variable overhead 1.00 0.00 1.00 3 Variable MOH 69,000 0.00 17.00 (17.00) 4 Fixed MOH Purchase price from outsider 448,500 $ 14.50 $ 17.00 $ (2.50 $ 5 Total manufacturing cost for 69,000 units 1,449,000 Total variable cost per unit Requirement 2. Now, assume that Global Systems can avoid $99,000 of fixed costs a year by outsourcing production. In addition, because sales are increasing, GlobalSystems needs 74,000 switches a year rather than 69,000 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. GlobalSystems Outsourcing Decision W #3 Question 1, E8-48B Part 3 of 6 Contribution margin per unit Fixed costs fitch that it uses in its final product. Global Systems incurred the uced 69,000 units last year: ng costs.) Fixed cost per unit Total variable costs Units needed Variable cost per unit Total relevant costs