Homework: Chapter

8

Homework (required)\ Question 5, E8-30A (similar to)\ HW Score:

72.75%,14.55

of 20 points\ Part 3 of 6\ Points: 1 of 2\ Question list\ questivi! I\ x/s Question 2\ Question 3\ Question 4\ Question 5\ Question 6\ x/ Question 7\ Question 8\ Question 9\ x/s Question 10\ GlobalSystems manufactures an optical switch that it uses in its final product. GlobalSystems incurred the following manufacturing costs when it produced 73,000 units last year:\ (Click the icon to view the manufacturing costs.)\ Read the requirements.\ GlobalSystems does not yet know how many switches it will need this year; however, another company has offered to sell GlobalSystems the switch for

$15.00

per unit. If GlobalSystems 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.\ \\\\table[[Direct materials,

$

,8.00,

$

,0.00,

$

,8.00],[Direct labor,,2.50,,0.00,,2.50],[Variable overhead,,3.00,,0.00,,3.00],[Purchase price from outsider,,0.00,,15.00,,

(15.00)

GlobalSystems manufactures an optical switch that it uses in its final product. GlobalSystems incurred the following manufacturing costs when it produced 73,000 units last year: (Click the icon to view the manufacturing costs.) Read the requirements. GlobalSystems does not yet know how many switches it will need this year; however, another company has offered to sell GlobalSystems the switch for $15.00 per unit. If GlobalSystems 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. Decision: because the variable cost per unit to make the switch is than the variable cost per unit to buy the switch. rather than 73,000 switches. What should the company do now? Complete an outsourcing decision analysis assuming fixed costs can be avoided by outsourcing production and the number of units needed have increased