Homework: Module 5 Homework Assignment Save Score: 7.5 of 15 pts 5 of 5 (5 complete) HW Score: 87.65%, 56.97 of 65 pts E8-28A (similar to) Question Help InteliSystems manufactures an optical switch that it uses in its final product. InteliSystems incurred the following manufacturing costs when Intel Systems does not yet know how many switches it will need this year, however, another company has offered to sel InteliSystems the it produced 68,000 units last year. switch for $13.50 per unit. If Intel Systems buy the switch from the outside supplier, the manufacturing facilities that will be idle cannot be (Click the icon to view the manufacturing costs.) used for any other purpose, yet none of the fixed costs are avoidable. Read the requirements Requirement 1. Given the same cost structure, should InteliSystems make or buy the switch? Show your analysis. Complete an incremental analysis to show whether Intel Systems 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.) InteliSystems Incremental Analysis for Outsourcing Decision Make Buy Unit Unit Difference 5 0.00 5 10.00 Variable cost per unit Direct materials Direct labor Variable overhead 10.00 $ 2.00 3.00 0.00 2.00 0.00 13.50 3.00 (13.50) Purchase price from outsider 0.00 1500 S 13505 ware 1.50 Total variable cost per unit Decision Buy the optical switch because the variable cost per unit to make the switch is greater than the variable cost per unit to buy the switch Requirement 2. Now, assume that Intel Systems can avoid 5108 000 of fixed costs a year by outsourcing production. In addition, because sales are increasing, InteliSystems needs 73,000 switches a year rather than 68 000 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 Intel Systems Outsourcing Decision Data Table Make Buy switches switches Direct materials 680,000 Direct labor 136.000 Variable MOH 204,000 Fixed MOH 442,000 Total relevant costs S Total manufacturing cost for 68,000 units 1,462,000 S Print Done