(L. OBJ. 4) Making outsourcing decisions [10—15 min] Opti Systems manufactures au optic...

(L. OBJ. 4) Making outsourcing decisions [10—15 min]

Opti Systems manufactures au optical switch that it uses in its final product. The switch has the following manufacturing costs per unit:

Another company has offered to sell Opti Systems the switch for $17.50 per unit. If Opri Systems buys the switch from the outside supplier, the manufacturing facilities that will be idled cannot he used for any other purpose, yet none of the fixed costs are avoidable.

Requirement

1. Prepare an outsourcing analysis to determine if Opti Systems should make or buy the switch.