Data Table 1 Direct materials Direct labor Variable MOH Fixed MOH Total manufacturing cost for 71,000 units $ 781,000 142,000 213,000 390,500 $ 1,526,500 Print Done TechSystems manufactures an optical switch that it uses in its final product. TechSystems incurred the following TechSystems does not yet know how many switches it will need this year; however, another company has offered manufacturing costs when it produced 71,000 units last year EEE (Cick the icon to view the manufacturing costs.) Read the requirements to sell TechSystems the switch for $18.50 per unit. If TechSystems 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 TechSystems Incremental Analysis for Outsourcing Decision Make Unit Buy Unit Difference Variable cost per unit Purchase price from outsider Direct materials Direct labor Variable overhead Total variable cost per unit Decision: Vbecause the variable cost per unit to make the switch is than the variable cost per unit to buy the switch Requirement 2. Now, assume that TechSystems can avoid $95,000 of fixed costs a year by outsourcing production. In addition, because sales are increasing. TechSystems needs 76,000 switches a year rather than 71,000. What should TechSystems do now? Complete an outsourcing decision analysis assuming fixed costs can be avoided by outsourcing production and the number of units needed have increased TechSystems Outorcing Decision Make Buy switches switches Total relevant costs