InteliSystems manufactures an optical switch that it uses in its final product. InteliSystems incurred the following manufacturing costs when it produced 66,000 units last year. (Click the icon to view the manufacturing costs.) Another company has offered to sell InteliSystems the switch for $16.00 per unit. If InteliSystems 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 79,000 optical switches next year (assume same relevant range). By outsourcing them, InteliSystems can use its idle facilities to manufacture another product that will contribute $130,000 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 "0" for any zero amounts.) InteliSystems Best Use of Facilities Analysis Make Buy and Use Facilities for Other Product Variable unit cost of obtaining the optical switches Total variable cost of obtaining the optical switches Expected net cost of obtaining the optical switches air air Data table A B 1 Direct materials $ 660,000 2 Direct labor 99,000 3 Variable MOH 4 Fixed MOH 5 Total manufacturing cost for 66,000 units 198,000 429,000 $ 1,386,000 Print Done - X Data table Variable cost per unit: Direct materials InteliSystems Incremental Analysis for Outsourcing Decision Make Buy Unit Unit Difference 10.00 $ 0.00 $ 10.00 Direct labor 1.50 0.00 1.50 Variable overhead 3.00 0.00 3.00 Purchase price from outsider 0.00 16.00 (16.00) Variable cost per unit $ 14.50 $ 16.00 $ (1.50) Print Done - X