K FiberSystems manufactures an optical switch that it uses in its final product. FiberSystems incurred the following manufacturing costs when it produced 70,000 units last year: (Click the icon to view the manufacturing costs.) Another company has offered to sell FiberSystems the switch for $16.00 per unit. If FiberSystems 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.) FiberSystems needs 84,000 optical switches next year (assume same relevant range). By outsourcing them, FiberSystems can use its idle facilities to manufacture another product that will contribute $100,000 to operating income, but none of the fixed costs will be avoidable. Should FiberSystems make or buy the switches? Show your analysis. FIDersystems Best Use of Facilities Analysis Buy and Use. Facilities for Other Total variable cost of obtaining the optical switches Expected net cost of obtaining the optical switches Make Product Data table same hem, F anufac 00,000 sts wil make A B 1 Direct materials $ 700,000 2 Direct labor 70,000 3 Variable MOH 210,000 4 Fixed MOH 455,000 5 Total manufacturing cost for 70,000 units $ 1,435,000 Buy and cilities f Data table FiberSystems Incremental Analysis for Outsourcing Decision Make Buy Unit Unit Difference I Variable cost per unit: Direct materials $ 10.00 $ 0.00 $ 10.00 Direct labor 1.00 0.00 1.00 Variable overhead 3.00 0.00 3.00 0.00 16.00 (16.00) Purchase price from outsider $ 14.00 $ 16.00 $ (2.00) Variable cost per unit Print Done