Exercise 7-6 (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 20,600 Tri-Robos is as follows. Cost Direct materials ($52 per robot) $1,071,200 Direct labor ($40 per robot) 824,000 Variable overhead ($7 per robot) 144,200 Allocated fixed overhead ($29 per robot) 600,000 Total $2,639,400 Jobs is approached by Tienh Inc., which offers to make Tri-Robo for $118 per unit or $2,430,800. Following are independent assumptions. Collapse question part (a1) 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).)

Make Buy Net Income Increase (Decrease)

Direct materials $ $ $

Direct labor

Variable overhead

Fixed overhead

Purchase price

Total annual cost

$ $ $ Using incremental analysis, determine whether Jobs should accept this offer.