RootSystems manufactures an optical switch that it uses in its final product. RootSystems incurred the following...

Transcribed Image Text:

RootSystems manufactures an optical switch that it uses in its final product. RootSystems incurred the following manufacturing costs when it produced 65,000 units last year: (Click the icon to view the manufacturing costs.) Read the requirements. RootSystems does not yet know how many switches it will need this year; however, another company has offered to sell RootSystems the switch for $9.00 per unit. If 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 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.) Variable cost per unit: RootSystems Incremental Analysis for Outsourcing Decision Total variable cost per unit Make Buy Unit Unit Difference Help me solve this Video Get more help - 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? Print Done Clear all Check answer RootSystems manufactures an optical switch that it uses in its final product. RootSystems incurred the following manufacturing costs when it produced 65,000 units last year: (Click the icon to view the manufacturing costs.) Read the requirements. RootSystems does not yet know how many switches it will need this year; however, another company has offered to sell RootSystems the switch for $9.00 per unit. If 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 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.) Variable cost per unit: RootSystems Incremental Analysis for Outsourcing Decision Total variable cost per unit Make Buy Unit Unit Difference Help me solve this Video Get more help - 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? Print Done Clear all Check answer