Question
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
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 21,300 Tri-Robos is as follows.
Cost | |||
---|---|---|---|
Direct materials ($51 per robot) | $1,086,300 | ||
Direct labor ($39 per robot) | 830,700 | ||
Variable overhead ($5 per robot) | 106,500 | ||
Allocated fixed overhead ($28 per robot) | 596,400 | ||
Total | $2,619,900 |
Jobs is approached by Tienh Inc., which offers to make Tri-Robo for $113 per unit or $2,406,900. Following are independent assumptions.
(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 | $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 | ||||
Purchase price | enter the purchase price in dollars | enter the purchase price in dollars | enter the purchase price in dollars | ||||
Total annual cost | $enter total annual cost in dollars | $enter total annual cost in dollars | $enter total annual cost in dollars |
Using incremental analysis, determine whether Jobs should accept this offer.
The offer select an option should not be acceptedshould be accepted. |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started