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TechSystems manufactures an optical switch that it uses in its final product. TechSystems incurred the following manufacturing costs when it produced 74,000 units last
TechSystems manufactures an optical switch that it uses in its final product. TechSystems incurred the following manufacturing costs when it produced 74,000 units last year: (Click the icon to view the manufacturing costs.) Read the requirements. TechSystems does not yet know how many switches it will need this year; however, another company has offered to se TechSystems the switch for $10.50 per unit. If Tech Systems 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 TechSystems make or buy the switch? Show your analysis. ... Complete an incremental analysis to show whether TechSystems 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.) TechSystems Incremental Analysis for Outsourcing Decision Variable cost per unit: Direct materials Direct labor Variable overhead Purchase price from outsider Total variable cost per unit Make Buy Unit Unit Difference Data table A B 1 Direct materials 666,000 2 Direct labor 3 Variable MOH 111,000 222,000 4 Fixed MOH 518,000 5 Total manufacturing cost for 74,000 units 1,517,000 Print Done
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