Homework: Chapter 25 Save Score: 0 of 1 pt E25-19 (similar to) Tech Systems manu

Question

Homework: Chapter 25 Save Score: 0 of 1 pt E25-19 (similar to) Tech Systems manufactures an optical switch that it uses in its final product Another company has Tech Systems needs 83,000 optical switches. By outsouroing them, Tech Systems can use its idle 90f 10 (6 complete) HW Score: 46.76%, 4.68 of 10 pts Question Help * offered to sell Tech Systems the switch for $20.50 per unit None of Tech's fixed costs are facilities to manufacture another product that will contribute $221,000 to operating income Read the tequitements (Click the icon to view the outsourcing decision) Requirement 1. identify the expected net costs that Tech Systems will incur to acquire 83,000 switches under theee athternative plans Outsource switches Facilities Make new Switch costs Make Idle roduet Variable costs Direct materials Direct labor Variable manufacturing overhead Purchase cost Expected profit contribution from the other product Total expected net cost of the optical switches Enter any number in the edt fields and then click Check Answer

Explanation / Answer

2)since the total cost is lower under alternative 3 that is to outsource the product and use idle facility ,Tech system should outsource the facility and make use of idle facility .

Outsource Make optical switch outsource optical switch-facilities idle MAle new product Variable cost Direct material 581000    [83000*7] Direct labor 249000    [83000*3] variable overhead 664000    [83000*8] purchase cost 1701500 [83000*20.5] 1701500 expected contribution margin from other product -221000 Total cost 1494000 1701500 1480500

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