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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
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 21,000 Tri-Robos is as follows. Cost Direct materials ($49 per robot) $1,029,000 Direct labor ($41 per robot) 861,000 Variable overhead ($5 per robot) 105,000 Allocated fixed overhead ($29 per robot) 600,000 Total $2,595,000 Jobs is approached by Tienh Inc., which offers to make Tri-Robo for $113 per unit or $2,373,000. 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).) Make Direct materials 1029000 $ Buy $ Net Income Increase (Decrease) 1029000 Direct labor 861000 861000 Variable 105000 105000 overhead Fixed 609000 204000 405000 overhead Purchase 2373000 -2373000 price Total annual $ 2604000 $ 2577000 $ 27000 cost 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).) Direct materials $ Direct labor Variable overhead Fixed overhead Opportunity cost Purchase price Totals 1 Make +A $ Net Income Buy Increase (Decrease) $
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