Answered step by step
Verified Expert Solution
Link Copied!

Question

...
1 Approved Answer

InteliSystems manufactures an optical switch that it uses in its final InteliSystems does not yet know how many switches it will need this product .

image text in transcribedimage text in transcribedimage text in transcribed

InteliSystems manufactures an optical switch that it uses in its final InteliSystems does not yet know how many switches it will need this product . InteliSystems incurred the following manufacturing costs when year; however, another company has offered to sell InteliSystems the it produced 68,000 units last year. switch for $10.00 per unit. If InteliSystems buys the switch from the Click the icon to view the manufacturing costs.) outside supplier, the manufacturing facilities that will be idle cannot be used for any other purpose, yet none of the fixed costs are avoidable. Read the requirements. Requirement 1. Given the same cost structure, should InteliSystems make or buy the switch? Show your analysis. Complete an incremental analysis to show whether InteliSystems should make or buy the switch. (Enter a "O" for any zero amounts. Round amounts to the nearest cent. Use a minus sign or parentheses when the cost to buy exceeds the cost to make.) InteliSystems Incremental Analysis for Outsourcing Decision Make Buy Unit Unit Difference Variable cost per unit: Total variable cost per unit Data Table - A B $ 544,000 102,000 1 Direct materials 2 Direct labor 3 Variable MOH 4 Fixed MOH 5 Total manufacturing cost for 68,000 units 204,000 476,000 1,326,000 $ Print Done 1. Given the same cost structure, should InteliSystems make or buy the switch? Show your analysis. 2. Now, assume that InteliSystems can avoid $99,000 of fixed costs a year by outsourcing production. In addition, because sales are increasing, InteliSystems needs 73,000 switches a year rather than 68,000 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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

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

Step: 2

blur-text-image

Step: 3

blur-text-image

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

Managerial Accounting

Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer

12th Edition

9780073526706

Students also viewed these Accounting questions