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Cool Systems manufactures an optical switch that it uses in its final product. Another company has offered to sell Cool Systems the switch for $15.00 per unit. None of Cool's fixed costs are avoidable. (Click the icon to view the outsourcing decision.) Cool Systems needs 79,000 optical switches. By outsourcing them, Cool Systems can use its idle facilities to manufacture another product that will contribute $225,000 to operating income. Read the requirements. Requirement 1. Identify the expected net costs that Cool Systems will incur to acquire 79,000 switches under three alternative plans. Outsource switches Make new Facilities Idle Switch costs Make product Variable costs: Direct materials Direct labor Variable manufacturing overhead Purchase cost Expected profit contribution from the other product Total expected net cost of the optical switches Make Outsource Difference optical switch optical switch (Make-Outsource) 5.00 5.00 Variable costs: Direct materials Direct labor Variable overhead 3.00 3.00 6.00 6.00 15.00 Purchase price from outsider (15.00) $ 14.00 $ 15.00 $ Differential cost per unit (1.00)