Homework Answers
Solution :
| Intelisystems | |||
| Incremental Analysis- Outsourcing decision | |||
| Particulars | Make Unit (Alt 1) | Buy Unit (Alt 2) | Difference |
| Variable cost per unit: | |||
| Purchase Price | $0.00 | $8.50 | -$8.50 |
| Direct material | $8.00 | $0.00 | $8.00 |
| Direct Labor | $1.50 | $0.00 | $1.50 |
| Variable overhead | $1.00 | $0.00 | $1.00 |
| Total Cost | $10.50 | $8.50 | $2.00 |
| Intelisystems | ||
| Best use of facility analysis | ||
| Particulars | Make | Buy and use facilities for other products |
| Variable cost per unit | $10.50 | $8.50 |
| Nos of units required | $79,000.00 | $79,000.00 |
| Total variable cost of obtaining the optical switches | $829,500.00 | $671,500.00 |
| Contribution margin from other product | $0.00 | -$140,000.00 |
| Expected net cost of obtaining the optical switches | $829,500.00 | $531,500.00 |
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