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 $20,900$ Tri$-$Robos is as follows.

Cost

Direct materials $($$$52$ per robot$)$ $$1,086,800$

Direct labor $($$$42$ per robot$)877,800$

Variable overhead $($$$7$ per robot$)146,300$

Allocated fixed overhead $($$$29$ per robot$)606,100$

Total $$2,717,000$

Jobs is approached by Tienh Inc., which offers to make Tri$-$Robo for $$119$ per unit or $$2,487,100.$

Following are independent assumptions.

$($a$1)$

Your Answer

Correct Answer

Your answer is correct.

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 $enter direct materials in dollars

$1086800$

Correct answer $enter direct materials in dollars

Correct answer $enter direct materials in dollars

$1086800$

Correct answer

Direct labor enter direct labor in dollars

$877800$

Correct answer enter direct labor in dollars

Correct answer enter direct labor in dollars

$877800$

Correct answer

Variable overhead enter variable overhead in dollars

$146300$

Correct answer enter variable overhead in dollars

Correct answer enter variable overhead in dollars

$146300$

Correct answer

Fixed overhead enter fixed overhead in dollars

$606100$

Correct answer enter fixed overhead in dollars

$201100$

Correct answer enter fixed overhead in dollars

$405000$

Correct answer

Purchase price enter the purchase price in dollars

Correct answer enter the purchase price in dollars

$2487100$

Correct answer enter the purchase price in dollars

$(2487100)$

Correct answer

Total annual cost $enter total annual cost in dollars

$2717000$

Correct answer $enter total annual cost in dollars

$2688200$

Correct answer $enter total annual cost in dollars

$28800$

Correct answer

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

The offer select an option

should be accepted

Correct answer.

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Solution

Attempts: $3$ of $3$ used

$($a$2)$

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$.(45).)$

Make Buy Net Income

Increase

$($Decrease$)$

Direct materials $enter direct materials in dollars

$enter direct materials in dollars

$enter direct materials in dollars

Direct labor enter direct labor in dollars

enter direct labor in dollars

enter direct labor in dollars

Variable overhead enter variable overhead in dollars

enter variable overhead in dollars

enter variable overhead in dollars

Fixed overhead enter fixed overhead in dollars

enter fixed overhead in dollars

enter fixed overhead in dollars

Opportunity cost enter the opportunity cost in dollars

enter the opportunity cost in dollars

enter the opportunity cost in dollars

Purchase price enter the purchase price in dollars

enter the purchase price in dollars

enter the purchase price in dollars

Totals $enter total amount in dollars

$enter total amount in dollars

$enter total amount in dollars

Based on the above assumptions, indicate whether the offer should be accepted or rejected?

The offer select an option

$.$