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Exercise 7-6 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
Exercise 7-6 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 19,600 Tri-Robos is as follows: Direct materials ($50 per robot) Direct labor ($39 per robot) Variable overhead ($7 per robot) Allocated fixed overhead ($31 per robot) Cost $980,000 764,400 137,200 600,000 $2,481,600 Total Jobs is approached by Tienh Inc., which offers to make Tri-Robo for $116 per unit or $2,273,600 Following are independent assumptions Assume that $405,000 of the fixed overhead cost can be avoided. (Enter negative amounts 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
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