irect materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$592,800

Direct labour. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

132,600

Variable overhead. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

179,400

Fixed overhead. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

475,000

Total manufacturing cost for 78,000 units. . . . . . . . . .

$1,379,800

Root Systems manufactures an optical switch that it uses in its final product. Root Systems incurred the following manufacturing costs when it produced 78,000 units last year: (Click the icon to view the manufacturing costs.) Root Systems does not yet know how many switches it will need this year; however, another company has offered to sell Root Systems the switch for $13.60 per unit. If Root 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 Root Systems make or buy the switch? Show your analysis. Complete an incremental analysis to show whether Root 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.) Requirements 1. Given the same cost structure, should Root Systems make or buy the switch? Show your analysis. 2. Now, assume that Root Systems can avoid $79,000 of fixed costs a year by outsourcing production. In addition, because sales are increasing, Root Systems needs 84,000 switches a year rather than 78,000 . What should Root Systems do now? 3. Given the last scenario, what is the most Root Systems would be willing to pay to outsource the switches