Root Systems manufactures an optical switch that it uses in its final product. Root Systems incurred the following manufacturing costs when it produced 80,000 units last year: (Click the icon to view the manufacturing costs.) Root Systems does not yet know how many switches it will need this year; however, another company has offered to sell Root Systems the switch for $14.20 per unit. If Root Systems buys the switch from the outside supplier, the manufacturing facilities that become idle cannot be used for any other purpose, yet none of the fixed costs are avoidable. Requirements Requirement 1. Given the same cost structure, should Root Systems make or buy the switch? Show your analysis. Complete an incremental analysis to show whether Root Systems should make or buy the switch. (Round your answers to the nearest cent. All boxes in the Cost to Make Minus Cost to Buy column should have a value entered.) Idle cannot be used for any other purpose, yet none of the fixed costs are avoidable. Manufacturing costs Rod SI h the $ 656,000 Direct materials.. Direct labour.... 96,000 Variable overhead. 224,000 480,000 Fixed overhead .. U $ 1,456,000 Total manufacturing cost for 80,000 units ... Print Done Root Systems Outsourcing Decision Make Unit Buy Unit Cost to Make Minus Cost to Buy Variable cost per unit: Direct materials Direct labour Variable overhead Purchase price from outsider Total variable cost per unit Decision: V because the V to make the switch is the variable cost per unit to buy the switch. Requirement 2. Now, assume that Root Systems can avoid $83,000 of fixed costs a year by outsourcing production. In addition, because sales are increasing, Root Systems needs 86,000 switches a year rather than 80,000. What should Root Systems do now? Root Systems Outsourcing Decision Make switches Buy switches Variable cost per unit Units needed Total variable costs Fixed costs Total relevant costs Decision: because the to make the switches are the total relevant costs to buy the switches. Requirement 3. Given the last scenario, what is the most Root Systems would be willing to pay to outsource the switches? (Round your answers to the nearest cent.) per switch. Therefore, Root Systems will only be willing to outsource if the outsourcing cost is Root Systems would be indifferent between outsourcing and making the switches if the outsourcing cost was $ $ per switch