Ayayai, Inc. has recently started the manufacture of Tri-Robo, a three-wheeled robot that can scan a home for fires and gas leaks and then transmit this information to a smartphone. The cost structure to manufacture 19,000 Tri-Robos is as follows. Direct materials ($48 per robot) Direct labor ($38 per robot) Variable overhead ($5 per robot) Allocated fixed overhead ($32 per robot) Total Cost $912,000 722,000 95,000 600,000 $2,329,000 Ayayai is approached by Tienh Inc., which offers to make Tri-Robo for $111 per unit or $2,109,000. Following are independent assumptions. Prepare an incremental analysis. Assume that $405,000 of the fixed overhead cost can be avoided. (If amount decreases net income then enter the amount using either a negative sign preceding the number e.g.-45 or parentheses e.g. (45).) Net Income Increase (Decrease) Make Buy Direct materials $ Direct labor Variable overhead Fixed overhead Purchase price Total annual cost $ Using incremental analysis, determine whether Ayayai should accept this offer. The offer Prepare an incremental analysis. Assume that none of the fixed overhead can be avoided. However, if the robots are purchased from Tienh Inc., Ayayai can use the released productive resources to generate additional income of $375,000. (If amount decreases net income then enter the amount using either a negative sign preceding the number e.g.-45 or parentheses e.g. (45).) Net Income Increase (Decrease) Make Buy Direct materials $ Direct labor Variable overhead Fixed overhead Opportunity cost Purchase price Totals 4 Based on the above assumptions, indicate whether the offer should be accepted or rejected? The offer eTextbook and Media