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$9.00 Question 6 and 7: Carrollton manufactures an optical switch that is uses in its final product. The switch has the following manufacturing costs per unit Direct Materials Direct Labor $1.50 Variable Overhead $5.00 Fixed Overhead $9.00 Manufacturing cost $24.50 Another company has offered to sell Carrollton the switch for $18.50 per unit. 6. If Carrollton buys the switch from outside supplier, the manufacturing facilities that will be idled cannot be used for any other purpose, yet none of the fixed costs are avoidable. Which one is reasonable decision for Carrollton (with justification)? a. Carrollton continues making the product because the company can generate $3 per unit. b. Carrollton continues making the product because the company can generate S6 per unit. c. Carrollton outsources making the product because the company can generate $3 per unit. d. Carrollton outsources making the product because the company can generate $6 per unit. 7. Carrollton needs 84,000 optical switches. By outsourcing them, Carrollton can use its idle facilities to make another product that will contribute $254,000 to operating income. Which plan makes the best use of Carrollton (with justification)? a. Carrollton continues making the product because the company can generate $252,000. b. Carrollton continues making the product because the company can generate $2,000. c. Carrollton outsources making the product because the company can generate $252,000. d. Carrollton outsources making the product because the company can generate $2,000

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