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10 of 23 -/15 Blossom has recently started to manufacture RecRobo, a three-wheeled robot that can scan a home for fires and gas leaks and
10 of 23 -/15 Blossom has recently started to manufacture RecRobo, a three-wheeled robot that can scan a home for fires and gas leaks and t transmit this information to a mobile phone. The cost structure to manufacture 20,000 RecRobos is as follows: Direct materials ($47 per robot) Cost $940,000 Direct labour ($30 per robot) Variable overhead ($6 per robot) 600,000 120,000 Allocated fixed overhead ($26 per robot) 520,000 Total $2.180,000 Blossom is approached by Steering Inc., which offers to make RecRobo for $84 per unit or $1,680,000. Using incremental analysis, determine whether Blossom should accept this offer under each of the following independent assumptions: hand cost.ismidable an amount reduces the nat Income than antar with Question 10 of 23 Blossom is approached by Steering Inc., which offers to make RecRobo for $84 per unit or $1,680,000. Using incremental analysis, determine whether Blossom should accept this offer under each of the following independent assumptions: -/15 (1) Assume that $340,000 of the fixed overhead cost is avoidable. (If an amount reduces the net income then enter with a negative sign preceding the number eg.-15,000 or parenthesis, eg. (15,000). While alternate approaches are possible, irrelevant fixed costs should be Included in both options when solving this problem.) Make Buy $ Net Income Increase (Decrease) Should the offer he accented? Make $ Buy Net Income Increase (Decrease) Should the offer be accepted? (2) Assume that none of the fixed overhead is avoidable. However, if the robots are purchased from Steering Inc.. Blossom can use the released productive resources to generate additional income of $240,000. (If an amount reduces the net income then enter with a negative sign preceding the number eg.-15,000 or parenthesis, eg. (15,000). While alternate approaches are possible, Irrelevant fixed costs should be included in both options when solving this problem.) Make Buy Net Income Increase (Decrease) Make Buy $ Net Income Increase (Decrease)
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