This Test: 3f p an optical switch that it uses in its final costs.) Another comp

Question

This Test: 3f p an optical switch that it uses in its final costs.) Another company has offered to sell from the outside supplier, none of the foxed 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) thenaysis to manufacture another product thal will contribute $150,000 to income, but none of the fixed costs will be avoidable. Should BestSystems make or buy the swilches? Show versus the cost per untan oulsourcing decision incmeuan use is idle facilities to t ear (assume same Complete the Best Use of Facilities Analysis. (Enter a "0" for any zero amounts. ) BestSystems Best Use of Facilities Analysis Facilities for Other Product Choose from any list or enter any number in the input fields and then continue to the next question Take a Test - MitchePa 9 8 5 6

Explanation / Answer

Solution:

Best Systems Best use of facility analysis Particulars Make Buy and use facility for other products Variable cost per unit $13.00 $16.00 Nos of unit of optical switch required 79000 79000 Total variable cost of obtaining the optical switches $1,027,000.00 $1,264,000.00 Less: Contribution margin from use of idle facilities $0.00 $150,000.00 Expected net cost of obtaining optical switches $1,027,000.00 $1,114,000.00 Decision: Company should make the optical switches

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