Manufacturing costs - X Direct materials Direct labour Variable overhead Fixed overhead 688,000 136,000 168,000 475,000 1,467,000 Total manufacturing cost for 80,000 units Print Done Outsourcing decision analysis Opti Systems Outsourcing Decision Make Buy Unit Unit Cost to Make Minus Cost to Buy 8.60 8.60 1.70 1.70 Variable cost per unit: Direct materials Direct labour Variable overhead Purchase price from outsider Variable cost per unit 2.10 $ 14.00 2.10 (14.00) (1.60) 12.40 $ 14.00 $ Print Done Opti Systems manufactures an optical switch that it uses in its final product. Opti Systems incurred the following manufacturing costs when it produced 80,000 units last year: 6 (Click the icon to view the manufacturing costs.) Another company has offered to sell Opti Systems the switch for $14 per unit. Opti Systems 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.) Opti Systems needs 81,000 optical switches next year (assume same relevant range). By outsourcing them, Opti Systems can use its idle facilities to manufacture another product that will contribute 5235,000 to operating income, but none of the fixed costs will be avoidable. Should Opti Systems make or buy the switches? Show your analysis. Complete the Best Use of Facilities Analysis. (Round unit costs to the nearest cent as needed. If a box is not used in the table, leave the box empty; do not enter a zero.) Opti Systems Best Use of Facilities Analysis Buy and Use Facilities for Make Other Product x Total variable cost of obtaining the optical switches Expected net cost of obtaining the optical switches Now determine whether Opti Systems should make or buy the switches. Opti Systems should make the optical switches. outsource the switches and use the facilities to manufacture the other product. use the facilities to manufacture products for others. outsource the other product and switches