PART A Fibre Systems Inc. manufactures an optical switch that it uses in its final product. The company incurred the following manufacturing costs when it produced $70,000$ optical switches last year: Direct materials Direct labour $$630,000105,000$ Variable overhead Fixed overhead $455,000140,000$ Total manufacturing costs for $70,000$ units $$1,330,000$ Fiber Systems does not yet know how many switches it will need this year. However, another company has offered to sell Fiber Systems the switch for $$14$ per unit. Required: $1.$ Assume that if Fiber Systems buys the switch from the outside supplier, the manufacturing facilities that become idle cannot be used for any other purpose. Also assume that none of the fixed costs are avoidable. Should Fiber Systems buy or continue making the switches? Show your analysis. $2.$ Now, assume Fiber Systems can avoid $$100,000$ of fixed costs a year by purchasing outside. In addition, because sales are increasing, Fiber Systems needs $75,000$ switches a year rather than $70,000.$ What should Fiber Systems do now? Show your analysis