Inteli Systems manufactures an optical switch that it uses in its final product. Inteli Systems incurred the following manufacturing costs when it produced 70,000 units last year: (Click the icon to view the manufacturing costs.) Inteli Systems does not yet know how many switches it will need this year; however, another company has offered to sell Inteli Systems the switch for $11.60 per unit. If Inteli 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 Inteli Systems make or buy the switch? Show your analysis. Complete an incremental analysis to show whether Inteli 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.) Variable cost per unit: Direct materials Direct labour Inteli Systems Outsourcing Decision Make Unit Buy Unit Cost to Make Minus Cost to Buy Variable overhead Purchase price from outsider Total variable cost per unit Decision: because the to make the switch is the variable cost per unit to buy the switch. Requirement 2. Now, assume that Inteli Systems can avoid $79,000 of fixed costs a year by outsourcing production. In addition, because sales are increasing, Inteli Systems needs 77,000 switches a year rather than 70,000. What should Inteli Systems do now? Complete an incremental analysis to calculate relevant costs. Inteli Systems Outsourcing Decision Variable cost per unit Units needed Total variable costs Fixed costs Total relevant costs Decision: Make switches Buy switches because the to make the switches are the total relevant costs to buy the switches. Requirement 3. Given the last scenario, what is the most Inteli Systems would be willing to pay to outsource the switches? (Round your answers to the nearest cent.) Inteli Systems would be indifferent between outsourcing and making the switches if the outsourcing cost was $ per switch. Therefore, Inteli Systems will only be willing to outsource if the outsourcing cost is $ per switch. Manufacturing costs Direct materials $ 616,000 Direct labour. 91,000 Variable overhead 161,000 445,000 Fixed overhead 1,313,000 Total manufacturing cost for 70,000 units Print Done