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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:
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 resuirements RootSystems does not yet know how many switches it will need this year, however, another company has offered to sell RootSystems the switch for $15.00 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 "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 RootSystems Incremental Analysis for Outsourcing Decision Make Buy Unit Unit Variable cost per unit Difference Choose from any list or enter any number in the input fields and then click Check Answer B 1 Direct materials $ 585,000 2 Direct labor 162,500 3 Variable MOH 65,000 4 Fixed MOH 357,500 5 Total manufacturing cost for 65,000 units $ 1,170,000
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