Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

WorldSystems manufactures an optical switch that it uses in its final product. WorldSystems incurred the following manufacturing costs when it produced 69.000 units last year:

image text in transcribed

WorldSystems manufactures an optical switch that it uses in its final product. WorldSystems incurred the following manufacturing costs when it produced 69.000 units last year: (Click the icon to view the manufacturing costs.) WorldSystems does not yet know how many switches it will need this year; however, another company has offered to sell WorldSystems the switch for $15.50 per unit If WorldSystems 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 Requirements Given the same cost structure, should WorldSystems make or buy the switch? Show your analysis. Now. assume that WorldSystems can avoid $97,000 of fixed costs a year by outsourcing production. In addition, because sales are increasing, WorldSystems needs 74,000 switches a year rather than 69,000. What should WorldSystems do now? Given the last scenario, what is the most WorldSystems would be willing to pay to outsource the switches? Requirement 1. Given the same cost structure, should WorldSystems make or buy the switch? Show your analysis. Complete an incremental analysis to show whether WorldSystems 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.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Audit Management And Supervision Wiley Ronald Institute Of Internal Auditors Professional Book Series

Authors: Gil W. Courtemanch, Guilbert W. Courtemanche

1st Edition

0471625655, 978-0471625650

More Books

Students also viewed these Accounting questions

Question

3. Outline the four major approaches to informative speeches

Answered: 1 week ago

Question

4. Employ strategies to make your audience hungry for information

Answered: 1 week ago