Global Systems manufactures an optical switch that it uses in its final product. Global Systems incurred the following manufacturing costs when it produced 70,000 units last year: (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 Global Systems the switch for $11.40 per unit. If Global Systems buys the switch from the outside supplier, the manufacturing facilities that become idle cannot be used for any other purpose, yet none of the fixed costs are avoidable. Requirements Requirement 1. Given the same cost structure, should Global Systems make or buy the switch? Show your analysis. Complete an incremental analysis to show whether Global Systems should make or buy the switch. (Round your answers to the nearest cent. All boxes in the Cost to Make Minus Cost to Buy column should have a value entered.) Global Systems Outsourcing Decision Make Buy Unit Unit Cost to Make Minus Cost to Buy Variable cost per unit: Direct materials Direct labour Variable overhead Purchase price from outsider Total variable cost per unit Manufacturing costs -X S Direct materials Direct labour. Variable overhead Fixed overhead Total manufacturing cost for 70,000 units 616,000 84,000 154,000 445,000 $ 1,299,000 Print Done Requirements 1. Given the same cost structure, should Global Systems make or buy the switch? Show your analysis. 2. Now, assume that Global Systems can avoid $83,000 of fixed costs a year by outsourcing production. In addition, because sales are increasing, Global Systems needs 75,000 switches a year rather than 70,000. What should Global Systems do now? 3. Given the last scenario, what is the most Global Systems would be willing to pay to outsource the switches? (Alt + NUMPAD5) Print Done