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Question Help (%) E8-28A (similar to) InteliSystems manufactures an optical switch that it uses in its final product. InteliSystems incurred the following manufacturing costs when it produced 74,000 units last year: (Click the icon to view the manufacturing costs.) InteliSystems does not yet know how many switches it will need this year; however, another company has offered to sell InteliSystems the switch for $12.50 per unit. If InteliSystems 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. Requirement 2. Now, assume that InteliSystems can avoid $102,000 of fixed costs a year by outsourcing production. In addition, because sales are increasing, InteliSystems needs 79,000 switches a year rather than 74,000 switches. What should the company do now? Complete an outsourcing decision analysis assuming fixed costs can be avoided by outsourcing production and the number of units needed have increased InteliSystems Data Table Outsourcing Decision Make Buy switches switches $ 814,000 185,000 148,000 518,000 $ 1,665,000 Direct materials Direct labor Variable MOH Fixed MOH Total manufacturing cost for 74,000 units Total relevant costs PrintDone Choose from any list or enter any number in the input fields and then click Check the switch from the outside supplier, the manufacturing facilities th used for any other purpose, yet none of the fixed costs are avoida ew the manufacturing costs.) ssume that InteliSystemj an 74,000 switches. W s are increasing, In Requirements g decision analysis ass ve increased 1. Given the same cost structure, should InteliSystems make or buy the switch? InteliSystems Show your analysis Outsourcing Decision Make switch 2. Now, assume that InteliSystems can avoid $102,000 of fixed costs a year by outsourcing production. In addition, because sales are increasing, InteliSystems needs 79,000 switches a year rather than 74,000 switches. What should the company do now? 814,00 185,00 148,00 518,00 $ 1,665,00 3. Given the last scenario, what is the most InteliSystems would be willing to pay to outsource the switches? rint Done PrintDone renter any number in the input fields and then click Check A

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