Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Intel Systems manufactures an optical switch that it uses in its final product Intel Systems incurred the following manufacturing costs when it produced 65,000 units

image text in transcribed
image text in transcribed
Intel Systems manufactures an optical switch that it uses in its final product Intel Systems incurred the following manufacturing costs when it produced 65,000 units last year (Click the icon to view the manufacturing costs) Intel Systems does not yet know how many switches it will need this year, however, another company has offered to sell Intel Systems the switch for $9.00 per unit of Intel Systems 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 foxed costs are avoidable Read the requirements Requirement 1. Given the same cost structure should Intel Systems 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 " for any zero amounts. Round amounts to the nearest cont Use a minus sign or parentheses when the cost to buy exceeds the cost to make Intell Systems Incremental Analysis for Outsourcing Decision Variable cost per unit Total vanable cost per unit Data Table - X Requirements Direct materials Direct labor Variable MOH 585,000 97,500 65,000 390,000 1,137,500 1. Given the same cost structure, should Intel Systems make or buy the switch? Show your analysis 2. Now, assume that inteliSystems can avoid $102,000 of fixed costs a year by outsourcing production. In addition, because sales are increasing Intel Systems needs 70,000 switches a year rather than 65,000 switches. What should the company do now? 3. Given the last scenario, what is the most inteliSystems would be willing to pay to outsource the switches? Fixed MOH Total manufacturing cost for 65,000 units

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Sawyer's Internal Auditing The Practice Of Modern Internal Auditing

Authors: Lawrence Sawyer, Mortimer Dittenhofer, James Scheiner

5th Edition

0894131788, 978-0894131783

More Books

Students also viewed these Accounting questions

Question

What is a parsimonious model?

Answered: 1 week ago

Question

Do teachers across cultures differ in immediacy? Explain.

Answered: 1 week ago