InteliSystems manufactures an optical switch that it uses in its final product. InteliSystems incurred the following manufacturing costs when it produced 70,000 units last year: (Click the icon to view the manufacturing costs.) InteliSystems does not yet know how many switches it will need this year; however, another company has offered to sell InteliSystems the switch for $8.50 per unit. If InteliSystems 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 fixed costs are avoidable. Read the requirements. InteliSystems Outsourcing Decision Buy Make switches switches Variable cost per unit Units needed Total variable costs Fixed costs Total relevant costs Choose from any list or enter any number in the input fields and then click Check Answer. parts remaining Clear All Check Answer InteliSystems manufactures an optical switch that it uses in its final product. InteliSystems incurred the following manufacturing costs when it produced 70,000 units last year: (Click the icon to view the manufacturing costs.) InteliSystems does not yet know how many switches it will need this year; however, another company has offered to sell InteliSystems the switch for $8.50 per unit. If InteliSystems 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 fixed costs are avoidable. Read the requirements. Intel Outsour Requirements - X Data Table Variable cost per unit Direct materials Units needed Total variable costs Direct labor Variable MOH 560,000 105,000 70,000 455,000 1. Given the same cost structure, should InteliSystems make or buy the switch? Show your analysis. 2. Now, assume that InteliSystems can avoid $105,000 of fixed costs a year by outsourcing production. In addition, because sales are increasing, InteliSystems needs 75,000 switches a year rather than 70,000 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 costs Fixed MOH $ 1,190,000 Total manufacturing cost for 70,000 units Total relevant costs Choose from any list or enter a Print Print Done Done 3 parts Clear All Check Answer remaining