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Cool Systems manufactures an optical switch that it uses in its final product. CoolSystems incurred the following manufacturing costs when it produced 68,000 units last year: (Click the icon to view the manufacturing costs.) CoolSystems does not yet know how many switches it will need this year; however, another company has offered to sell CoolSystems the switch for $12.50 per unit. If CoolSystems 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. Read the requirements. Complete an outsourcing decision analysis assuming fixed costs can be avo Data Table CoolSystems Outsourcing Decision Buy Make switches 680,000 switches Direct materials Direct labor 102,000 Variable MOH 204,000 476,000 Fixed MOH Total variable costs $ 1,462,000 Total manufacturing cost for 68,000 units Total relevant costs Print Done Choose from any list or enter any number in the input fields and then cilen MECK Answer. i Requirements 1. Given the same cost structure, should CoolSystems make or buy the switch? Show your analysis. 2. Now, assume that CoolSystems can avoid $100,000 of fixed costs a year by outsourcing production. In addition, because sales are increasing, CoolSystems needs 73,000 switches a year rather than 68,000 switches. What should the company do now? 3. Given the last scenario, what is the most CoolSystems would be willing to pay to outsource the switches? Print Done

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