Global Systems manufactures an optical switch that it uses in its final product. Global Systems incurred...

 

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Global Systems manufactures an optical switch that it uses in its final product. Global Systems incurred the following manufacturing costs when it produced 73,000 units last year. (Click the icon to view the manufacturing costs.) Global Systems does not yet know how many switches it will need this year, however, another company has offered to sell Global Systems the switch for $14.30 per unit. If Global Systems buys the switch from the outside supplier, the manufacturing facilities that become idle cannot be used for any other purpose, yet none of the fixed costs are avoidable. Requirements Requireme Complete a Variable co Direct r Direct Variable Purcha Total va Decision: Requirements 1. Given the same cost structure, should Global Systems make or buy the switch? Show your analysis. 2. Now, assume that Global Systems can avoid $82,000 of fixed costs a year by outsourcing production. In addition, because sales are increasing, Global Systems needs 78,000 switches a year rather than 73,000. What should Global Systems do now? 3. Given the last scenario, what is the most Global Systems would be willing to pay to outsource the switches? Print Done X hswers to the Manufacturing costs. Direct materials. Direct labour.. Variable overhead Fixed overhead.. Total manufacturing cost for 73,000 units Print Done $ $ - X 620,500 131,400 160,600 465,000 1,377,500 ue entered.) riable cost per unit to buy the switch. Requirement 2. Now, assume that Global Systems can avoid $82,000 of fixed costs a year by outsourcing production. In addition, because sales are increasing, Global Systems needs 78,000 switches a year rather than 73,000. What should Global Global Systems manufactures an optical switch that it uses in its final product. Global Systems incurred the following manufacturing costs when it produced 73,000 units last year. (Click the icon to view the manufacturing costs.) Global Systems does not yet know how many switches it will need this year, however, another company has offered to sell Global Systems the switch for $14.30 per unit. If Global Systems buys the switch from the outside supplier, the manufacturing facilities that become idle cannot be used for any other purpose, yet none of the fixed costs are avoidable. Requirements Requireme Complete a Variable co Direct r Direct Variable Purcha Total va Decision: Requirements 1. Given the same cost structure, should Global Systems make or buy the switch? Show your analysis. 2. Now, assume that Global Systems can avoid $82,000 of fixed costs a year by outsourcing production. In addition, because sales are increasing, Global Systems needs 78,000 switches a year rather than 73,000. What should Global Systems do now? 3. Given the last scenario, what is the most Global Systems would be willing to pay to outsource the switches? Print Done X hswers to the Manufacturing costs. Direct materials. Direct labour.. Variable overhead Fixed overhead.. Total manufacturing cost for 73,000 units Print Done $ $ - X 620,500 131,400 160,600 465,000 1,377,500 ue entered.) riable cost per unit to buy the switch. Requirement 2. Now, assume that Global Systems can avoid $82,000 of fixed costs a year by outsourcing production. In addition, because sales are increasing, Global Systems needs 78,000 switches a year rather than 73,000. What should Global

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1 Given the same cost structure Global Systems should make the switch The total manufacturin... View the full answer