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This problem has more 5 steps to it, I just couldn't get the rest of the questions but if you can follow through the rest
This problem has more 5 steps to it, I just couldn't get the rest of the questions but if you can follow through the rest that would be great! Thank you!
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.) RootSystems does not yet know how many switches it will need this year, however, another company has offered to sell RootSystems the switch for $14.00 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. Read the requirements 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.) RootSystems Incremental Analysis for Outsourcing Decision Make Buy Unit Unit Difference Variable cost per unit: Direct materials 5.5 Direct labor 1 Variable overhead Purchase price from outsider Total variable cost per unit Data Table - X $ Direct materials Direct labor Variable MOH 715,000 130,000 195,000 422,500 Fixed MOH $ Total manufacturing cost for 65,000 units 1,462,500 Print Done X Requirements 1. Given the same cost structure, should RootSystems make or buy the switch? Show your analysis. 2. Now, assume that RootSystems can avoid $102,000 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 DoneStep by Step Solution
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