Question Help (Click the icon to view the outsourcing decision analysis.) RootSystems manufactures an optical switch that it uses in its final product. RootSystems incurred the following manufacturing costs when it produced 65,000 units last year: (Click the icon to view the manufacturing costs.) Another company has offered to sell RootSystems the switch for $16.50 per unit. JE RootSystems buys the switch from the outside supplier, none of the fixed costs are avoidable. The company prepared an outsourcing decision analysis to show the cost per unit of making the switches versus the cost per unit of buying TI (outsourcing) the switches RootSystems needs 84.000 optical switches next year (assume same relevant range). By outsourcing them, RootSystems can use its idle facilities to manufacture another product that will contribute $100,000 to operating income, but none of the forced costs will be avoidable. Should RootSystems make or buy the switches? Show your analysis Complete the Best Use of Facilities Analysis (Enter a "O for any zero amounts.) RootSystems Best Use of Facilities Analysis the Buy and Use Facilities for Other Product ve Variable unit cost of obtaining the cotical switches WG ver Number of optical switches Total variable cost of obtaining the optical switches Expected profit contribution from the other product owy st Ui- Choose from any list or enter any number in the in v enth optical switch that it uses in its final product. owing manufacturing costs when it produced 65,000 (Click the icon to view the outsourcing decision analysis e manufacturing costs.) to sell RootSystems the switch for $16.50 per unit. If Ih from the outside supplier, none of the fixed costs are epared an outs switches versus A Data Table RootSystems needs 84,000 optical switches next year (assum range). By outsourcing them, RootSystems can use its idle fa manufacture another product that will contribute $100,000 to but none of the fixed costs will be avoidable. Should RootSyst. Facilities Analysi Best Us Direct materials Direct labor Variable MOH 650,000 97,500 195,000 390,000 1,332,500 Fixed MOH Total manufacturing cost for 65,000 units $ taining the optical s ches obtaining the optical bution from the other product Print Done obtaining the optical switches st or enter any number in the input fields and then click Check Answer. ical switch that it uses in its final product. manufacturing costs when it produced 65,000 .: (Click the icon to view the outsourcing decision i Data Table RootSystems Incremental Analysis for Outsourcing Decision Make Unit Buy Unit Difference Variable cost per unit: Direct materials Direct labor Variable overhead Purchase price from outsider 10.00 $ 1.50 3.00 0.00 0.00 $ 0.00 0.00 16.50 10.00 1.50 3.00 (16.50) 14.50 $ 16.50 $ (2.00) Variable cost per unit Print Done er any number in the input fields and then click Check Answer uring costs.) "We for any z RootSystems manufactures an optical switch that it uses in its final product. !!! Click the icon to view the outsourcing decision analysis.) RootSystems incurred the following manufacturing costs when it produced 65,000 units last year. RootSystems needs 84,000 optical switches next year (assume same relevant !(Click the icon to view the manufacturing costs.) range). By outsourcing them, RootSystems can use its idle facilities to Another company has offered to sell RootSystems the switch for $16.50 per unit. If manufacture another product that will contribute $100,000 to operating income, RootSystems buys the switch from the outside supplier, none of the fixed costs are but none of the foxed costs will be avoidable. Should RootSystems make or buy avoidable. The company prepared an outsourcing decision analysis to show the the switches? Show your analysis. cost per unit of making the switches versus the cost per unit of buying (outsourcing) the switches. Complete the Best Use of Facilities Analysis. (Enter a "O" for any zero amounts.) RootSystems Best Use of Facilities Analysis Buy and Use Facilities for Other Make Product Variable unit cost of obtaining the optical switches Number of optical switches a Total variable cost of obtaining the optical switches Expected profit contribution from the other product y Expected net cost of obtaining the optical switches
