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Sensor Systems manufactures an optical switch that it uses in its final product. Another company has offered to sell Sensor Systems the switch for $

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Sensor Systems manufactures an optical switch that it uses in its final product. Another company has offered to sell Sensor Systems the switch for $16.00 per unit. None of Sensor's fixed costs are avoidable.
(Click the icon to view the outsourcing decision.)
Sensor Systems needs 78,000 optical switches. By outsourcing them, Sensor Systems can use its idle facilities to manufacture another product that will contribute $218,000 to operating income.
Read the requirements.
Requirement 1. Identify the expected net costs that Sensor Systems will incur to acquire 78,000 switches under three alternative plans.
Switch costs
Requirements
Identify the expected net costs that Sensor Systems will incur to acquire 78,000 switches under three alternative plans: make the switches, buy the switches and leave facilities idle, buy the switches and use the idle facilities to make another product.
Which plan makes the best use of Sensor System's facilities? Support your answer.
Requirement 2. Which plan makes the best use of Sensor System's facilities? Support your answer.
Sensor Systems should because this plan results in the lowest
However, Sensor Systems should also consider qualitative factors such as
and
Data table
\table[[Variable costs:,\table[[Make],[optical switch]],\table[[Outsource],[optical switch]],\table[[Difference],[(Make-Outsource)]]],[Direct materials,$,9.00,,$,9.00],[Direct labor,,3.50,,,3.50],[Variable overhead,,2.00,,,2.00],[Purchase price from outsider,,,16.00,,(16.00)
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