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

InteliSystemsInteliSystems

incurred the following manufacturing costs when it produced

$65$ comma $00065,000$

units last$$ year:

View the manufacturing costs.

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Another company has offered to sell

InteliSystemsInteliSystems

the switch for

$ $13\mathrm{.}00$$$13\mathrm{.}00$

per unit. If

InteliSystemsInteliSystems

buys the switch from the outside$$ supplier, none of the fixed costs are avoidable. The company prepared an outsourcing decision analysis to show the cost per unit of making the switches versus the cost per unit of buying$($outsourcing$)$ the switches.

View the outsourcing decision analysis.

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InteliSystemsInteliSystems

needs

$80$ comma $00080,000$

optical switches next year$($assume same relevant$$ range$).$ By outsourcing$$ them,

InteliSystemsInteliSystems

can use its idle facilities to manufacture another product that will contribute

$ $220$ comma $000$$$220,000$

to operating$$ income, but none of the fixed costs will be avoidable. Should

InteliSystemsInteliSystems

make or buy the$$ switches? Show your analysis.

Question content area bottom

Part $1$

Complete the Best Use of Facilities Analysis. $($Enter a$"0"$ for any zero$$ amounts.$)$

InteliSystems

Best Use of Facilities Analysis

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Buy and Use

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Facilities for Other

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Make

Product

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Total variable cost of obtaining the optical switches

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Expected net cost of obtaining the optical switches

$$