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: 5(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 $14 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 Manufacturing costs Direct materials $ 595,000 119,000 Direct labour. Variable overhead 154,000 450,000 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 Intel 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 Inteli Systems Outsourcing Decision Make Cost to Make Minus Unit Buy Unit Cost to Buy Variable cost per unit: Direct materials $ 8.50 $ 8.50 Direct labour 1.70 1.70 Variable overhead 2.20 2.20 14.00 Purchase price from outsider (14.00) $ 12.40 $ 14.00 (1.60) Total variable cost per unit Fixed overhead $ 1,318,000 Total manufacturing cost for 70,000 units Print Done Decision: Make the optical switch because variable cost per uni make the switch the per unit to buy switch Requirement 2. Now, assume that Inteli Systems can avoid $77,000 of fixed costs a year by outsourcing production. In addition, because sales are increasing, Inteli Systems needs 78,000 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 Make switches Buy switches Variable cost per unit Units needed Total variable costs Fixed costs Total relevant costs