Opti Systems manufactures an opticsl switch that it uses in its final product. The switch has the following manufacturing costs per unit:

prepare an outsourcing analysis to determine whether Opti Systems should make or buy the switch.

Direct materials $ 6.00 Direct labor 4.00 Variable overhead 6.00 7.00 Fixed overhead $ 23.00 Manufacturing product cost Another company has offered to sell Opti Systems the switch for $17.50 per unit. If Opti Systems buys the switch from the outside supplier, the idle manufacturing facilities cannot be used for any other purpose, yet none of the fixed costs are avoidable. Make Difference Outsource optical switch optical switch (Make-Outsource) Variable costs: Direct materials Direct labor Variable overhead Purchase price from outsider Total differential cost per unit