Requirements 1. Given the same cost structure, should CoolSystems make or buy the switch? Show your analysis. 2. Now, assume that CoolSystems can avoid $106,000 of fixed costs a year by outsourcing production. In addition, because sales are increasing, CoolSystems needs 78,000 switches a year rather than 73,000 switches. What should the company do now? 3. Given the last scenario, what is the most CoolSystems would be willing to pay to outsource the switches? Print Done CoolSystems manufactures an optical switch that it uses in its final product. CoolSystems incurred the following manufacturing costs when it produced 73,000 units last year: (Click the icon to view the manufacturing costs.) Read the requirements. CoolSystems does not yet know how many switches it will need this year; however, another company has offered to sell CoolSystems the switch for $10.50 per unit. If CoolSystems buys the switch from the outside supplier, the manufacturing facilities that will be idle cannot be used for any other purpose, yet none of the fixed costs are avoidable. C Requirement 1. Given the same cost structure, should CoolSystems make or buy the switch? Show your analysis. Complete an incremental analysis to show whether CoolSystems should make or buy the switch. (Enter a "O" for any zero amounts. Round amounts to the nearest cent. Use a minus sign or parentheses when the cost to buy exceeds the cost to make.) Variable cost per unit: Direct materials Direct labor CoolSystems Incremental Analysis for Outsourcing Decision Variable overhead Purchase price from outsider Total variable cost per unit Data table Make Unit Buy Unit Difference 1 Direct materials B $ 803,000 146,000 2 Direct labor 3 Variable MOH 73,000 4 Fixed MOH 438,000 5 Total manufacturing cost for 73,000 units $ 1,460,000 Print Done