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Intel Systems manufactures an optical switch that it uses in its final product. IntellSystems incurred the following manufacturing costs when it produced 67,000 units last
Intel Systems manufactures an optical switch that it uses in its final product. IntellSystems incurred the following manufacturing costs when it produced 67,000 units last year: (Click the Icon to view the manufacturing costs.) Another company has offered to sell InteliSysternis the switch for $13.50 per unit. If Intel Systems 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.) InteliSystems needs 81,000 optical switches next year (assume same relevant range). By outsourcing them, InteliSystems can use its idle facilities to manufacture another product that will contribute $220,000 to operating income, but none of the fixed costs will be avoidable. Should IntellSystems make or buy the switches? Show your analysis. Complete the Best Use of Facilities Analysis. (Enter a "O" for any zero amounts.) IntellSystems Best Use of Facilities Analysis Data Table Buy and Use Facilities for Other Make Product InteliSystems Incremental Analysis for Outsourcing Decision Make Buy Total variable cost of obtaining the optical switches Unit Unit Difference Expected net cost of obtaining the optical switches $ 10.00 $ 0.00 S 10.00 Variable cost per unit: Direct materials Direct labor Variable overhead Purchase price from outsider 2.00 0.00 i Data Table 3.00 0.00 2.00 3.00 (13.50) 0.00 13.50 $ 15.00 $ 13.50 S 1.50 Variable cost per unit Direct materials $ Direct labor 670,000 134,000 201.000 435,500 Print Done Variable MOH Fixed MOH Choose from any list or er $ 1.440.500 ? Total manufacturing cost for 67,000 units part 1 remaining Clear All Check Answer Print Done
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