Bonita has recently started to manufacture RecRobo, a three-wheeled robot that can scan a home for fires and gas leaks and then transmit this information to a mobile phone. The cost structure to manufacture 19,900 RecRobos is as follows:

		Cost
Direct materials ($46 per robot)		$915,400
Direct labour ($34 per robot)		676,600
Variable overhead ($4 per robot)		79,600
Allocated fixed overhead ($22 per robot)		437,800
Total		$2,109,400

Bonita is approached by Kennel Inc., which offers to make RecRobo for $82 per unit or $1,631,800. Using incremental analysis, determine whether Bonita should accept this offer under each of the following independent assumptions: (1) Assume that $278,600 of the fixed overhead cost is avoidable. (If an amount reduces the net income then enter with a negative sign preceding the number e.g.-15,000 or parenthesis, e.g. (15,000). While alternate approaches are possible, irrelevant fixed costs should be included in both options when solving this problem.)

problem.)

		Make		Buy		Net Income Increase (Decrease)
select an item Variable overheadPurchase priceDirect materialsDirect labourFixed overheadTotal annual cost		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount
select an item Purchase priceFixed overheadDirect labourDirect materialsVariable overheadTotal annual cost		enter a dollar amount		enter a dollar amount		enter a dollar amount
select an item Direct labourPurchase priceVariable overheadTotal annual costFixed overheadDirect materials		enter a dollar amount		enter a dollar amount		enter a dollar amount
select an item Direct materialsFixed overheadDirect labourPurchase priceVariable overheadTotal annual cost		enter a dollar amount		enter a dollar amount		enter a dollar amount
select an item Fixed overheadDirect labourTotal annual costDirect materialsPurchase priceVariable overhead		enter a dollar amount		enter a dollar amount		enter a dollar amount
select a closing name Purchase priceDirect labourDirect materialsFixed overheadTotal annual costVariable overhead		$enter a total amount		$enter a total amount		$enter a total amount

(2)Assume that none of the fixed overhead is avoidable. However, if the robots are purchased fromKennelInc.,Bonitacan use the released productive resources to generate additional income of $178,600.(If an amount reduces the net income then enter with a negative sign preceding the number e.g.-15,000 or parenthesis, e.g. (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)
select an item Opportunity costDirect labourTotal annual costVariable overheadPurchase priceFixed overheadDirect materials		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount
select an item Total annual costVariable overheadOpportunity costPurchase priceDirect materialsFixed overheadDirect labour		enter a dollar amount		enter a dollar amount		enter a dollar amount
select an item Direct materialsFixed overheadOpportunity costVariable overheadDirect labourPurchase priceTotal annual cost		enter a dollar amount		enter a dollar amount		enter a dollar amount
select an item Fixed overheadDirect labourTotal annual costVariable overheadDirect materialsOpportunity costPurchase price		enter a dollar amount		enter a dollar amount		enter a dollar amount
select an item Total annual costPurchase priceOpportunity costFixed overheadDirect materialsVariable overheadDirect labour		enter a dollar amount		enter a dollar amount		enter a dollar amount
select an item Variable overheadFixed overheadDirect materialsTotal annual costDirect labourPurchase priceOpportunity cost		enter a dollar amount		enter a dollar amount		enter a dollar amount
select a closing name Variable overheadFixed overheadOpportunity costDirect labourTotal annual costPurchase priceDirect materials		$enter a total amount		$enter a total amount		$enter a total amount