Requirement 2:

sta zero an ond Data Table al $ Direct materials Direct labor Variable MOH Fixed MOH Total manufacturing cost for 73,000 units 803,000 109,500 219,000 438,000 1,569,500 $ Print Done mounts. anas inus Requirements wem 1. Given the same cost structure, should RootSystems make or buy the switch? Show your analysis 2. Now, assume that RootSystems can avoid $99,000 of fixed costs a year by outsourcing production. In addition, because sales are increasing, RootSystems needs 78,000 switches a year rather than 73,000 switches. What should the company do now? 3. Given the last scenario, what is the most RootSystems would be willing to pay to outsource the switches? Print Done un RootSystems manufactures an optical switch that it uses in its final product. RootSystems incurred the following manufacturing costs when it produced 73,000 units last year: (Click the icon to view the manufacturing costs.) Read the requirements RootSystems does not yet know how many switches it will need this year, however, another company has offered to sell RootSystems the switch for $13.50 per unit. If RootSystems 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. Requirement 1. Given the same cost structure, should RootSystems make or buy the switch? Show your analysis. Complete an incremental analysis to show whether RootSystems 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.) RootSystems Incremental Analysis for Outsourcing Decision Make Buy Unit Difference Unit Variable cost per unit: Total variable cost per unit CoolSystems Outsourcing Decision Make switches Buy switches Total relevant costs sta zero an ond Data Table al $ Direct materials Direct labor Variable MOH Fixed MOH Total manufacturing cost for 73,000 units 803,000 109,500 219,000 438,000 1,569,500 $ Print Done mounts. anas inus Requirements wem 1. Given the same cost structure, should RootSystems make or buy the switch? Show your analysis 2. Now, assume that RootSystems can avoid $99,000 of fixed costs a year by outsourcing production. In addition, because sales are increasing, RootSystems needs 78,000 switches a year rather than 73,000 switches. What should the company do now? 3. Given the last scenario, what is the most RootSystems would be willing to pay to outsource the switches? Print Done un RootSystems manufactures an optical switch that it uses in its final product. RootSystems incurred the following manufacturing costs when it produced 73,000 units last year: (Click the icon to view the manufacturing costs.) Read the requirements RootSystems does not yet know how many switches it will need this year, however, another company has offered to sell RootSystems the switch for $13.50 per unit. If RootSystems 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. Requirement 1. Given the same cost structure, should RootSystems make or buy the switch? Show your analysis. Complete an incremental analysis to show whether RootSystems 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.) RootSystems Incremental Analysis for Outsourcing Decision Make Buy Unit Difference Unit Variable cost per unit: Total variable cost per unit CoolSystems Outsourcing Decision Make switches Buy switches Total relevant costs