Exercise 23-06 a1-a2

Visterwey, Inc. has recently started the manufacture of Tabo, a three-wheeled robot that can scan a home for fites and gas leaks and then transmit this information to a smartphone. The cost structure to manufacture 21,400 T-Robesis as follows. Cost Direct materials (552 per robot) 51,112,800 Direct later ($39 per robot) 834,600 Variable overhead ($5 per robot) 107.000 Allocated fored overhead (28 per robot) 599,200 Total $2,653,600 Waterways approached by Tinh Inc, which offers to make sobe for $114 per unit or $2.439,800 Following are independent assumptions Increase Assume that 405,000 of the fixed overhead cost can be avoided. (Enter negative amounts using either a negative sin preceding the number -15 or parentheses es. (457) Net Income Make Buy (Decrease) Direct materials Direct labor Variable overhead Fixed overhead Purchase price Total anual cost Using incremental analysis, determine whether Waterway should accept this offer The offer Assume that none of the foedeverhead can be avoided. However of the robots are purchased from Tinh Inc. Waterway 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.o. -45 or parentheses (45). Net Income Increase Make Buy (Decrease) Direct materials Direct labor Variable overhead Foed overhead Opportunity cost Purchase price Totals Based on the above astumptions, indicate whether the offer should be accepted or rejected? The offer