CoolSystems manufactures an optical switch that it uses in its final product. CoolSystems incurred the following manufacturing costs when it produced 66,000 units last year (Click the icon to view the manufacturing costs.) Read the requirements CoolSystems does not yet know how many switches it will need this year, however, another company has offered to sell CoolSystems the switch for $11.00 per unit. If CoolSystems 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 CoolSystems make or buy the switch? Show your analysis Complete an incremental analysis to show whether CoolSystems 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) CoolSystems Incremental Analysis for Outsourcing Decision Variable cost per unit Make Buy Unit Unit Difference Variable cost per unit: Incremental Analysis for Outsourcing Decision Total variable cost per unit Make Buy Unit Unit Difference Data table 1 Direct materials 2 Direct labor 3 Variable MOH 4 Fixed MOH A 5 Total manufacturing cost for 66,000 units 9 B 660,000 165,000 66,000 363,000 $ 1,254,000 er E un pu Requirements 1. Given the same cost structure, should CoolSystems make or buy the switch? Show your analysis. 2. Now, assume that CoolSystems can avoid $99,000 of fixed costs a year by outsourcing production. In addition, because sales are increasing, CoolSystems needs 71,000 switches a year rather than 66,000 switches. What should the company do now? 3. Given the last scenario, what is the most CoolSystems would be willing to pay to outsource the switches? - X