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Requirement 2. Now, assume that FiberSystems can avoid $97,000 of fixed costs a year by outsourcing production. In addition, because sales are increasing, FiberSystems needs 78,000 switches a year rather than 73,000 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. Data table FiberSystems manufactures an optical switch that it uses in its final product. FiberSystems incurred the following manufacturing costs when it produced 73,000 units last year: (Click the icon to view the manufacturing costs.) FiberSystems does not yet know how many switches it will need this year; however, another company has offered to sell FiberSystems the switch for $12.50 per unit. If FiberSystems 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 1. Given the same cost structure, should FiberSystems make or buy the switch? Show your analysis. 2. Now, assume that FiberSystems can avoid $97,000 of fixed costs a year by outsourcing production. In addition, because sales are increasing, FiberSystems needs 78,000 switches a year rather than 73,000 switches. What should the company do now? 3. Given the last scenario, what is the most FiberSystems would be willing to pay to outsource the switches

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