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 19,700 Tri-Robos is as follows.

Cost Direct materials ($52 per robot) $1,024,400

Direct labor ($40 per robot)

788,000 Variable overhead ($7 per robot) 137,900

Allocated fixed overhead ($30 per robot) 600,000

Total $2,550,300 Jobs is approached by Tienh Inc., which offers to make Tri-Robo for $119 per unit or $2,344,300.

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 $ $ $

Direct labor

Variable overhead

Fixed overhead

Purchase price

Total annual cost $ $ $