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Homework: HW #6 - Chapter 8 Save Score: 0 of 1 pt 8 of 10 (2 complete) HW Score: 20%, 2 of 10 pts E8-28A (similar to) Question Help WorldSystems manufactures an optical switch that it uses in its final product. WorldSystems incurred the following manufacturing costs when it produced 74,000 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. Read the requirements. Requirement 1. Given the same cost structure, should WorldSystems make or buy the switch? Show your analysis. Complete an incremental analysis to show whether World Systems 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.) World Systems Incremental Analysis for Outsourcing Decision Data Table X Requirements Make Buy Unit Unit Difference Variable cost per unit: B 1 Direct materials $ 814,000 2 Direct labor 111,000 1. Given the same cost structure, should WorldSystems make or buy the switch? Show your analysis. 2. Now, assume that WorldSystems can avoid $108,000 of fixed costs a year by outsourcing production. In addition, because sales are increasing, WorldSystems needs 79,000 switches a year rather than 74,000 switches. What should the company do now? 3. Given the last scenario, what is the most WorldSystems would be willing to pay to outsource the switches? 3 Variable MOH 74,000 4 Fixed MOH 518,000 Total variable cost per unit 5 Total manufacturing cost for 74,000 units $ 1,517,000 Print Done Print Done Choose from any list or enter any number in the input fields and then click Check