Opti Systems manufactures an optical switch that it uses in its final product. Another company has offered to sell Opti Systems the switch for $$18\mathrm{.}50$ per unit. None of Opti's fixed costs are avoidable.

$($Click the icon to view the outsourcing decision.$)$

Opti Systems needs $82,000$ optical switches. By outsourcing them, Opti Systems can use its idle facilities to manufacture another product that will contribute $$223,000$ to operating income.

Read the requirements.

Requirement $1.$ Identify the expected net costs that Opti Systems will incur to acquire $82,000$ switches under three alternative plans.

$\backslash$table$[[$Switch costs,Make,Outsource switches$],[\backslash$table$[[$Facilities$],[$Idle$]],\backslash$table$[[$Make new$],[$product$]]],[$Variable costs:$],[$Direct materials$],[$Direct labor$],[$Variable manufacturing overhead$],[$Purchase cost$],[\backslash$table$[[$Expected profit contribution from the other$],[$product$]]],[$Total expected net cost of the optical switches,,,$]]$

Opti Systems manufactures an optical switch that it uses in its final product. Another company has offered to sell Opti Systems the switch for $$18\mathrm{.}50$ per unit. None of Opti's fixed costs are avoidable.

$($Click the icon to view the outsourcing decision.$)$

Opti Systems needs $82,000$ optical switches. By outsourcing them, Opti Systems can use its idle facilities to manufacture another product that will contribute $$223,000$ to operating income.

Read the requirements.

Requirement $1.$ Identify the expected net costs that Opti Systems will incur to acquire $82,000$ switches under three alternative plans.

$\backslash$table$[[$Switch costs,Make,Outsource switches$],[\backslash$table$[[$Facilities$],[$Idle$]],\backslash$table$[[$Make new$],[$product$]]]]$

Requirements

Identify the expected net costs that Opti Systems will incur to acquire $82,000$ switches under three alternative plans: make the switches, buy the switches and leave facilities idle, buy the switches and use the idle facilities to make another product.

Which plan makes the best use of Opti System's facilities? Support your answer.

Data table

$\backslash$table$[[$Variable costs:,$\backslash$table$[[$Make$],[$optical switch$]],\backslash$table$[[$Outsource$],[$optical switch$]],\backslash$table$[[$Difference$],[($Make$-$Outsource$)]]],[,,,,,,,],[$Direct materials,$$,-,9\mathrm{.}00,,,$$$,9\mathrm{.}00],[$Direct labor,,,$3\mathrm{.}00,,,,3\mathrm{.}00],[$Variable overhead,,,$5\mathrm{.}00,,,,5\mathrm{.}00],[$Purchase price from outsider,,,,$$,18\mathrm{.}50,,(18\mathrm{.}50)$