Answered step by step
Verified Expert Solution
Question
1 Approved Answer
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 19,800 Tri-Robos is as follows. Direct materials ($51 per robot) Direct labor ($40 per robot) Variable overhead ($6 per robot) Allocated fixed overhead ($30 per robot) Cost $1,009,800 792,000 118,800 594,000 $2,514,600 Total Jobs is approached by Tienh Inc., which offers to make Tri-Roba for $116 per unit or $2,296,800. Following are independent assumptions. Assume that $405,000 of the fixed overhead cost can be avoided. (Enter negative amounts using either 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 Purchase price Total annual cost Using incremental analysis, determine whether Jobs should accept this offer. The offer LINK TO TEXT VIDEO: SIMILAR EXERCISE 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).) Net Income Increase (Decrease) Make Buy Direct materials $ $ Direct labor Variable overhead Fixed overhead Opportunity cost Purchase price Totals $ Based on the above assumptions, indicate whether the offer should be accepted or rejected? The offer
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started