Exercise 20-6 (Part Level Submission)

Jobs, 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 19,800 Tri-Robos is as follows.

		Cost
Direct materials ($51 per robot)		$1,009,800
Direct labor ($40 per robot)		792,000
Variable overhead ($6 per robot)		118,800
Allocated fixed overhead ($30 per robot)		600,000
Total		$2,520,600

Jobs is approached by Tienh Inc., which offers to make Tri-Robo for $116 per unit or $2,296,800. Following are independent assumptions.

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Your answer is partially correct. Try again Assume that none of the fixed overhead can be avoided. However, if the robots are purchased from Tienh Inc., Jobs can use the released productive resources to generate additional income of $375,000. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Net Income Increase (Decrease) Make LI Direct materials 1009800 1009800 Direct labor 792000 792000 Variable overhead 118800 118800 Fixed overhead 600000 405000 195000 Opportunity cost Purchase price 2296800 2296800 Totals 1520600 2701800 181200 Based on the above assumptions, indicate whether the offer should be accepted or rejected? The offer should not be accepted