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Tech Systems manufactures an optical switch that it uses in its final product. Another company has offered to sell Tech Systems the switch for $14.00 per unit. None of Tech's fixed costs are avoidable. (Click the icon to view the outsourcing decision.) Requirement 1. Identify the expected net costs that Tech Systems will incur to acquire 83,000 switches under three alternative plans. Outsource switches Variable costs: Switch 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 Variable costs: Direct materials Direct labor Variable overhead Purchase price from outsider Differential cost per unit $ Make $ Make Outsource Difference optical switch optical switch (Make-Outsource) 6.00 5.00 1.00 Facilities Idle $ 12.00 $ $ Make new product 14.00 14.00 $ 6.00 5.00 1.00 (14.00) (2.00) X Tech Systems needs 83,000 optical switches. By outsourcing them, Tech Systems can use its idle facilities to manufacture another product that will contribute $219,000 to operating income. Read the requirements. Requirements 1. Identify the expected net costs that Tech Systems will incur to acquire 83,000 switches under three alternative plans: make the switches, buy the switches and leave facilities idle, buy the switches and use the idle facilities to make another product. 2. Which plan makes the best use of Tech System's facilities? Support your answer. Print Done Clear all Check answer

Tech Systems manufactures an optical switch that it uses in its final product. Another company has offered to sell Tech Systems the switch for $14.00 per unit. None of Tech's fixed costs are avoidable. (Click the icon to view the outsourcing decision.) Requirement 1. Identify the expected net costs that Tech Systems will incur to acquire 83,000 switches under three alternative plans. Outsource switches Variable costs: Switch 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 Variable costs: Direct materials Direct labor Variable overhead Purchase price from outsider Differential cost per unit $ Make $ Make Outsource Difference optical switch optical switch (Make-Outsource) 6.00 5.00 1.00 Facilities Idle $ 12.00 $ $ Make new product 14.00 14.00 $ 6.00 5.00 1.00 (14.00) (2.00) X Tech Systems needs 83,000 optical switches. By outsourcing them, Tech Systems can use its idle facilities to manufacture another product that will contribute $219,000 to operating income. Read the requirements. Requirements 1. Identify the expected net costs that Tech Systems will incur to acquire 83,000 switches under three alternative plans: make the switches, buy the switches and leave facilities idle, buy the switches and use the idle facilities to make another product. 2. Which plan makes the best use of Tech System's facilities? Support your answer. Print Done Clear all Check answer

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Tech Systems manufactures an optical switch that it uses in its final product. Another company has offered to sell Tech Systems the switch for $14.00 per unit. None of Tech's fixed costs are avoidable. (Click the icon to view the outsourcing decision.) Requirement 1. Identify the expected net costs that Tech Systems will incur to acquire 83,000 switches under three alternative plans. Outsource switches Variable costs: Switch 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 Variable costs: Direct materials Direct labor Variable overhead Purchase price from outsider Differential cost per unit $ Make $ Make Outsource Difference optical switch optical switch (Make-Outsource) 6.00 5.00 1.00 Facilities Idle $ 12.00 $ $ Make new product 14.00 14.00 $ - 6.00 5.00 1.00 (14.00) (2.00) X Tech Systems needs 83,000 optical switches. By outsourcing them, Tech Systems can use its idle facilities to manufacture another product that will contribute $219,000 to operating income. Read the requirements. Requirements 1. Identify the expected net costs that Tech Systems will incur to acquire 83,000 switches under three alternative plans: make the switches, buy the switches and leave facilities idle, buy the switches and use the idle facilities to make another product. 2. Which plan makes the best use of Tech System's facilities? Support your answer. Print Done Clear all X Check answer
Transcribed Image Text:Tech Systems manufactures an optical switch that it uses in its final product. Another company has offered to sell Tech Systems the switch for $14.00 per unit. None of Tech's fixed costs are avoidable. (Click the icon to view the outsourcing decision.) Requirement 1. Identify the expected net costs that Tech Systems will incur to acquire 83,000 switches under three alternative plans. Outsource switches Variable costs: Switch 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 Variable costs: Direct materials Direct labor Variable overhead Purchase price from outsider Differential cost per unit $ Make $ Make Outsource Difference optical switch optical switch (Make-Outsource) 6.00 5.00 1.00 Facilities Idle $ 12.00 $ $ Make new product 14.00 14.00 $ - 6.00 5.00 1.00 (14.00) (2.00) X Tech Systems needs 83,000 optical switches. By outsourcing them, Tech Systems can use its idle facilities to manufacture another product that will contribute $219,000 to operating income. Read the requirements. Requirements 1. Identify the expected net costs that Tech Systems will incur to acquire 83,000 switches under three alternative plans: make the switches, buy the switches and leave facilities idle, buy the switches and use the idle facilities to make another product. 2. Which plan makes the best use of Tech System's facilities? Support your answer. Print Done Clear all X Check answer
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