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Blossom, 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
Blossom, 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 to a smartphone. The cost structure to manufacture 21.200 Tri-Robos is as follows. Cost Direct materials ($51 per robot) $1,081,200 Direct labor ($42 per robot) 890,400 Variable overhead ($6 per robot): 127,200 Allocated fixed overhead ($28 per robot) 593,600 Total $2,692,400 Blossom is approached by Tienh Inc, which offers to make Tri-Robo for $117 per unit or $2,480,400. Following are independent assumptions. (a1) Assume that $405,000 of the fixed overhead cost can be avoided. (Enter negative amounts using either a negative sign preceding the number eg-45 or parentheses eg. (45)) Direct materials Direct labor Variable overhead Fixed overhead Purchase price Total annual cost $ Buy Make Using incremental analysis, determine whether Blossom should accept this offer. The offer $ Net Income Increase (Decrease)
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