Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

RootSystems manufactures an optical switch that it uses in its final product. RootSystems RootSystems does not yet know how many switches it will need this

image text in transcribedimage text in transcribedimage text in transcribed

RootSystems manufactures an optical switch that it uses in its final product. RootSystems RootSystems does not yet know how many switches it will need this year; however, incurred the following manufacturing costs when it produced 65,000 units last year: another company has offered to sell RootSystems the switch for $12.50 per unit. If (Click the icon to view the manufacturing costs.) RootSystems 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 Read the requirements. avoidable. Requirement 1. Given the same cost structure, should RootSystems make or buy the switch? Show your analysis. Complete an incremental analysis to show whether RootSystems 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.) Data table Requirements 1. Given the same cost structure, should RootSystems make or buy the switch? Show your analysis. 2. Now, assume that RootSystems can avoid $99,000 of fixed costs a year by outsourcing production. In addition, because sales are increasing, RootSystems needs 70,000 switches a year rather than 65,000 switches. What should the company do now? 3. Given the last scenario, what is the most RootSystems would be willing to pay to outsource the switches

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Advanced Level Audit And Assurance Q And A 2020

Authors: ACA Simplified

1st Edition

B08924C516, 979-8648590489

More Books

Students also viewed these Accounting questions