Sensor Systems manufactures an optical switch that it uses in its final product. Another company

has offered to sell Sensor Systems the switch for $$21\mathrm{.}00$ per unit. None of Sensor's fixed costs

are avoidable.

$($Click the icon to view the outsourcing decision.$)$

Sensor Systems needs $78,000$ optical switches. By outsourcing them, Sensor Systems

can use its idle facilities to manufacture another product that will contribute $$224,000$ to

operating income.

Read the requirements.

Requirement $1.$ Identify the expected net costs that Sensor Systems will incur to acquire $78,000$ switches under three alternative plans.

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

Data tableSensor Systems manufactures an optical switch that it uses in its final product. Another company

has offered to sell Sensor Systems the switch for $$21\mathrm{.}00$ per unit. None of Sensor's fixed costs

are avoidable.

$($Click the icon to view the outsourcing decision.$)$

Sensor Systems needs $78,000$ optical switches. By outsourcing them, Sensor Systems

can use its idle facilities to manufacture another product that will contribute $$224,000$ to

operating income.

Read the requirements.

Requirement $1.$ Identify the expected net costs that Sensor Systems will incur to acquire $78,000$ switches under three alternative plans.

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

Data table