$*2$ PARTS$*$

View the costs.

View the additional information.

Prepare an outsourcing analysis to determine whether Image Systems should make or buy the switch. $($For the Difference column, use a minus sign or parentheses only

when the cost of outsourcing exceeds the cost of making the switches in$-$house.$)$

Variable costs:

Direct materials

Direct labor

Variable overhead

Purchase price from outsider

$$

Total differential cost per unit

Additional Information

Another company has offered to sell Image Systems the switch for $$13\mathrm{.}00$ per unit.

If Image Systems buys the switch from the outside supplier, the idle manufacturing

facilities cannot be used for any other purpose, yet none of the fixed costs are

avoidable.