Homework Answers
| Make Optical Switch | Outsource Optical Switch | Difference (Make-Outsource) | |
| Variable Costs: | |||
| Direct materials | 6 | 6 | |
| Direct labor | 3.5 | 3.5 | |
| Variable overhead | 5 | 5 | |
| Purchase price from outsider | 16 | -16 | |
| Total difference cost per unit | 14.5 | 16 | -1.5 |
Since cost of making is less than cost of buying, hence switched should be made.
Kindly comment if you need further assistance.
Thanks‼!
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