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K CoolSystems manufactures an optical switch that it uses in its final product. CoolSystems incurred the following manufacturing costs when it produced 71,000 units
K CoolSystems manufactures an optical switch that it uses in its final product. CoolSystems incurred the following manufacturing costs when it produced 71,000 units last year: (Click the icon to view the manufacturing costs.) Another company has offered to sell CoolSystems the switch for $9.00 per unit. If CoolSystems 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. Complete the Best Use of Facilities Analysis. (Enter a "0" for any zero amounts.) CoolSystems Best Use of Facilities Analysis Total variable cost of obtaining the optical switches Expected net cost of obtaining the optical switches Decision: Data table A B Buy and Use Facilities for Other 1 Direct materials $ 568,000 2 Direct labor 71,000 Make Product 3 Variable MOH 213,000 4 Fixed MOH 461,500 X 5 Total manufacturing cost for 71,000 units $ 1,313,500 Print Done - Coc will
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