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Part $1$

Sensor Systems manufactures an optical switch that it uses in its final product. The switch has the following manufacturing costs per$$ unit:

LOADING...$($Click the icon to view the$$ costs.$)$ LOADING...$($Click the icon to view additional$$ information.$)$

Prepare an outsourcing analysis to determine whether Sensor Systems should make or buy the switch. $($For the Difference$$ column, use a minus sign or parentheses only when the cost of outsourcing exceeds the cost of making the switches$$ in$-$house.$)$

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Part $1$

Make

Outsource

Difference

optical switch

optical switch

$($Make$$Outsource$)$

Variable costs:

Direct materials

Direct labor

Variable overhead

Purchase price from outsider

Total differential cost per unit