Variable costs: Direct materials Direct labor Variable overhead Purchase price from outsider Differential cost per unit...

  
 

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Variable costs: Direct materials Direct labor Variable overhead Purchase price from outsider Differential cost per unit Make optical switch S 6.00 3.50 1.00 Outsource Difference optical switch (Make-Outsource) $ 10.50 $ 12.00 12.00 $ 6.00 3.50 1.00 (12.00) (1.50) Tech Systems manufactures an optical switch that it uses in its final product. Another company has offered to sell Tech Systems the switch for $12.00 per unit. None of Tech's fixed costs are avoidable. (...) Tech Systems needs 85,000 optical switches. By outsourcing them, Tech Systems can use its idle facilities to manufacture another product that will contribute $222,000 to operating income. 1. Identify the expected net costs that Tech Systems will incur to acquire 85,000 switches under three alternative plans: make the switches, buy the switches and leave facilities idle, buy the switches and use the idle facilities to make another product. 2. Which plan makes the best use of Tech System's facilities? Support your answer. Variable costs: Direct materials Direct labor Variable overhead Purchase price from outsider Differential cost per unit Make optical switch S 6.00 3.50 1.00 Outsource Difference optical switch (Make-Outsource) $ 10.50 $ 12.00 12.00 $ 6.00 3.50 1.00 (12.00) (1.50) Tech Systems manufactures an optical switch that it uses in its final product. Another company has offered to sell Tech Systems the switch for $12.00 per unit. None of Tech's fixed costs are avoidable. (...) Tech Systems needs 85,000 optical switches. By outsourcing them, Tech Systems can use its idle facilities to manufacture another product that will contribute $222,000 to operating income. 1. Identify the expected net costs that Tech Systems will incur to acquire 85,000 switches under three alternative plans: make the switches, buy the switches and leave facilities idle, buy the switches and use the idle facilities to make another product. 2. Which plan makes the best use of Tech System's facilities? Support your answer.

Answer rating: 100% (QA)

Tech systems centers ought to undertake the opportunity plan o... View the full answer