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Globalsystems manufactures an optical switch that it uses in its final product. GlobalSystems does not yet know how many switches it will need this year, however, GlobalSystems incurred the following manufacturing costs when it produced 70,000 units another company has offered to sell Globalsystems the switch for $11.50 per unit. If last year. GlobalSystems buys the switch from the outside supplier, the manufacturing facilities (Click the icon to view the manufacturing costs.) that will be idle cannot be used for any other purpose, yet none of the fixed costs are avoidable. Read the requirements - X Data Table Requirements A B 1. Given the same cost structure, should GlobalSystems make or buy the switch? Show your analysis. 1 Direct materials S 560,000 2. Now, assume that GlobalSystems can avoid $102,000 of fixed costs a year by 140,000 outsourcing production. In addition, because sales are increasing, 2 Direct labor GlobalSystems needs 75,000 switches a year rather than 70,000 switches. 3 Variable MOH 210,000 What should the company do now? 3. Given the last scenario, what is the most GlobalSystems would be willing to pay 4 Fixed MOH 420,000 to outsource the switches' 5 Total manufacturing cost for 70,000 units 1,330,000 Print Done Print Done Global Systems Incremental Analysis for Outsourcing Decision Make Buy Unit Unit Difference Variable cost per unit: Total variable cost per unit