Requirements - X 1. Given the same cost structure, should InteliSystems make or buy the switch? Show your analysis. 2. Now, assume that InteliSystems can avoid $105,000 of fixed costs a year by outsourcing production. In addition, because sales are increasing, InteliSystems needs 74,000 switches a year rather than 69,000 switches. What should the company do now? 3. Given the last scenario, what is the most InteliSystems would be willing to pay to outsource the switches? Print Done E8-28A (similar to) Question Help InteliSystems manufactures an optical switch that it uses in its final product. InteliSystems incurred the following manufacturing costs when it produced 69,000 units last year: (Click the icon to view the manufacturing costs.) InteliSystems does not yet know how many switches it will need this year, however, another company has offered to sell InteliSystems the switch for $10.00 per unit. If InteliSystems 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. Read the requirements Requirement 1. Given the same cost structure, should InteliSystems make or buy the switch? Show your analysis. Complete an incremental analysis to show whether InteliSystems should make or buy the switch. (Enter a "0" 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.) InteliSystems Incremental Analysis for Outsourcing Decision Make Buy Unit Unit Difference Variable cost per unit: Total variable cost per unit Requirements - X 1. Given the same cost structure, should InteliSystems make or buy the switch? Show your analysis. 2. Now, assume that InteliSystems can avoid $105,000 of fixed costs a year by outsourcing production. In addition, because sales are increasing, InteliSystems needs 74,000 switches a year rather than 69,000 switches. What should the company do now? 3. Given the last scenario, what is the most InteliSystems would be willing to pay to outsource the switches? Print Done E8-28A (similar to) Question Help InteliSystems manufactures an optical switch that it uses in its final product. InteliSystems incurred the following manufacturing costs when it produced 69,000 units last year: (Click the icon to view the manufacturing costs.) InteliSystems does not yet know how many switches it will need this year, however, another company has offered to sell InteliSystems the switch for $10.00 per unit. If InteliSystems 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. Read the requirements Requirement 1. Given the same cost structure, should InteliSystems make or buy the switch? Show your analysis. Complete an incremental analysis to show whether InteliSystems should make or buy the switch. (Enter a "0" 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.) InteliSystems Incremental Analysis for Outsourcing Decision Make Buy Unit Unit Difference Variable cost per unit: Total variable cost per unit
