Rend the requitements. Requirement 1. Given the same cost structure. should TechSystems make Complete an incremental analysis to show whether Techsystems should mig 1. Given the same cost structure, ahould Techleystems make of buy the switch? minus tign. or parentheses when the cost to buy exceeds the cost to make ) 2. Now, assume that Techsystems can avoid 5104,000 of foed costs a year by outsourcing production. In adwition, beciuse sales are increasing. Techsyalems needs 72,000 ewitches a ynar rather than 67.000 sweches. What Techsysiems needs 72.000 whild 3. Given the last swenario, what is the mott Techsystems would be willing to pay to outsougct the switches? Requirement 2. Now, astume that TechSystems can avoid $104,000 of foed costs a year by outsourcing production. In addition, because nales are increasing. Techisystems i 72,000 switches a year rather than 67,000 switches. What should the company do now? TechSystems manufactures an optical switch that it uses in its final product. TechSystems incurred the following manufacturing costs when it produced 67,000 units last year: (Click the icon to view the manufacturing costs.) Read the requirements. TechSystems does not yet know how many switches it will need this year, however, another company has offered to sell TechSystems the switch for $16.00 per unit. If TechSystems buys the switch from the outside supplier, the L manufacturing facilities that will be idle cannot be used for any other purpose, yet none of the fixed costs are avoidable. Requirements 1. Given the same cost structure, should TechSystems make or buy the switch? Show your analysis. 2. Now, assume that TechSystems can avoid $104,000 of fixed costs a year by outsourcing production. In addition, because sales are increasing, TechSystems needs 72,000 switches a year rather than 67,000 switches. What should the company do now? 3. Given the last scenario, what is the most TechSystems would be willing to pay to outsource the switches? the switch uy the swil Requirement 1. Given the same cost structure, should TochSystems make or buy thinuwitch? Show your analysis. Complete an incremental analysis to show whether TechSystems should make or buy the switch. (Enter a " for any zero amounts. Round amounts to the riearest minus sign of parentheses when the cost to buy exceeds the cost to make.) Decision: because the variable cost per unit to make the switch is than the variable cost per unit to buy the switch. Requirement 2. Now, assume that TechSystems can avoid $104,000 of fixed costs a year by outsourcing production, In addition, because sales are increasing. Te 72,000 swiches a year rather than 67,000 switches. What should the company do now? Complete an outsourcina decision analvsis assumina fixed costs can be avoided bv outsourcina production and the number of units needed have increasedi. Requirement 2. Now, assume that TechSystems can avoid $104,000 of fixed costs a year by outsourcing production. In addition, because sales are increasing. TechS 72,000 switches a year rather than 67,000 switches. What should the company do now? Complete an outsourcing decision analysis assuming fixed costs can be avoided by outsourcing production and the number of units needed have increased Decislon: because the total relevant costs to make the switches are than the total relevant costs to buy the switches. Requirement 3. Given the last scenario, what is the most TochSystems would be willing to pay to outsource the switches? Begin by identifying the basic formula that is used to determine the indifferent outsourcing cost per unit: Requirement 3. Given the last scenario, what is the most Tech Systems would be willing to pay to outsource the sWiches? Begin by identifying the basic formula that is use to determine the indifferent outsourcing cost per unit. Using the basic formula you determined above, solve for the outsourcing cost at which TechSystems would be indifferent between outsour per unit calculation to the nearest cent.) TechSystems would be indifferent between outsourcing and making the switches if the outsourcing cost was per switch. Therefore, Systems will only be willing to outsource if the outsourcing cost is per switch
