Techsystems incureed the following manufacturing costs when it produced $73,000 units last years.
Table:
requirements:
Requirement 1:
requirement 2:
requirement 3:
i have provided all of the infomation that problem gives me.
Direct materials Direct labor Variable Fixed MOH Total manufacturing cost for 73,000 units $730,000 109,500 73,000 474,500 $1,387,000 tal A 1. Given the same cost structure, should TechSystems make or buy the switch? Show your analysis. 2. Now, assume that TechSystems can avoid $108,000 of fixed costs a year by outsourcing production. In addition, because sales are increasing, TechSystems needs 78,000 switches a year rather than 73,000 switches What should the company do now? 3. Given the last scenario, what is the most TechSystems would be willing to pay to outsource the switches? TechSystems Incremental Analysis for Outsourcing Decision Make Buy Unit Unit Difference Variable cost per unit Total variable cost per unit Decision: V because the variable cost per unit to make the switch is than the variable cost per unit to buy the switch Outsourcing Decision Make Buy switches switches Total relevant costs Decisiorn because the total relevant costs to make the switches are than the total relevant costs to buy the switches Begin by identifying the basic formula that is used to determine the indifferent outsourcing cost per unit Cost if making switches Cost if outsourcing switches Using the basic formula you determined above, solve for the outsourcing cost at which TechSystems would be indifferent between outsourcing and making the switches. (Enter your per unit calculation to the nearest cent.) TechSystems would be indifferent between outsourcing and making the switches if the outsourcing cost was s per switch. Therefore, Systems will only be willing to outsource if the outsourcing cost is s per switch TechSystems does not yet know how many switches it will need this year, however, another company has offered to sell TechSystems the switch for $10.50 per unit. If TechSystems 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 TechSystems manufactures an optical switch that it uses in its final product. TechSystems incurred the following manufacturing costs when it produced 73,000 units last year EEl (Click the icon to view the manufacturing costs.) Read the requirements Requirement 1. Given the same cost structure, should TechSystems make or buy the switch? Show your analysis. Requirements nus s 1. Given the same cost structure, should TechSystems make or buy the switch? Show your analysis. 2. Now, assume that TechSystems can avoid $108,000 of fixed costs a year by outsourcing production. In addition, because sales are increasing, TechSystems needs 78,000 switches a year rather than 73,000 switches. What should the company do now? 3. Given the last scenario, what is the most TechSystems would be willing to pay to outsource the switches? e a min Direct materials Direct labor Variable MOH Fixed MOH Total manufacturing cost for 73,000 units 730,000 109,500 73,000 474,500 $ 1,387,000
