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Outsourcing decision analysis Manufacturing costs Best Use of Facilities Analysis Buy and Use Facilities for...

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Outsourcing decision analysis Manufacturing costs Best Use of Facilities Analysis Buy and Use Facilities for Other Make Product Total variable cost of obtaining the optical switches Expected net cost of obtaining the optical switches Decision: GlobalSystems manufactures an optical switch that it uses in its final product. GlobalSystems incurred the following manufacturing costs when it produced 67,000 units last year: View the manufacturing costs. Another company has offered to sell GlobalSystems the switch for $15.00 per unit. If GlobalSystems buys the switch from the outside supplier, none of the fixed costs are avoidable. The company prepared an outsourcing decision analysis to show the cost per unit of making the switches versus the cost per unit of buying (outsourcing) the switches. View the outsourcing decision analysis. GlobalSystems needs 82,000 optical switches next year (assume same relevant range). By outsourcing them, GlobalSystems can use its idle facilities to manufacture another product that will contribute $150,000 to operating income, but none of the fixed costs will be avoidable. Should GlobalSystems make or buy the switches? Show your analysis

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