TechSystems manufactures an optical switch that it uses in its final product. TechSystems incurred the following manufacturing costs when it produced 74,000 units last year: (Click the icon to view the manufacturing costs.) Read the requirements. Requirement 1. Given the same cost structure, should TechSystems make or buy the switch? Show your analysis. Complete an incremental analysis show whether TechSystems 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 TechSystems Incremental Analysis for Outsourcing Decision Make Unit Buy Unit Difference TechSystems does not yet know how many switches it will need this year; however, another comp TechSystems the switch for $10.50 per unit. If TechSystems buys the switch from the outside sup manufacturing facilities that will be idle cannot be used for any other purpose, yet none of the fixed Data table 0 X
TechSystems manufactures an optical switch that it uses in its final product. TechSystems incurred the following manufacturing costs when it produced 74,000 units last year: (Click the icon to view the manufacturing costs.) Read the requirements. Requirement 1. Given the same cost structure, should TechSystems make or buy the switch? Show your analysis. Complete an incremental analysis show whether TechSystems 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 TechSystems Incremental Analysis for Outsourcing Decision Make Unit Buy Unit Difference TechSystems does not yet know how many switches it will need this year; however, another comp TechSystems the switch for $10.50 per unit. If TechSystems buys the switch from the outside sup manufacturing facilities that will be idle cannot be used for any other purpose, yet none of the fixed Data table 0 X
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:TechSystems manufactures an optical switch that it uses in its final product. TechSystems incurred the following manufacturing
costs when it produced 74,000 units last year:
(Click the icon to view the manufacturing costs.)
Read the requirements.
Requirement 1. Given the same cost structure, should TechSystems make or buy the switch? Show your analysis.
Complete an incremental analysis to show whether TechSystems 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.)
TechSystems
Incremental Analysis for Outsourcing Decision
Make
Unit
Variable cost per unit:
Direct materials
Direct labor
Variable overhead
Purchase price from outsider
Total variable cost per unit
Buy
Unit
Difference
TechSystems does not yet know how many switches it will need this year; however, another company has offered to se
TechSystems the switch for $10.50 per unit. If TechSystems 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
Data table
A
1 Direct materials
2 Direct labor
3 Variable MOH
4 Fixed MOH
5 Total manufacturing cost for 74,000 units
Print
Done
$
$
B
666,000
111,000
222,000
518,000
1,517,000
X
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