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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 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 20,000 Tri-Robos is as follows.
Cost | |||
Direct materials ($50 per robot) | $1,000,000 | ||
Direct labor ($40 per robot) | 800,000 | ||
Variable overhead ($6 per robot) | 120,000 | ||
Allocated fixed overhead ($30 per robot) | 600,000 | ||
Total | $2,520,000 |
Jobs is approached by Tienh Inc., which offers to make Tri-Robo for $115 per unit or $2,300,000. (b) Describe the qualitative factors that might affect the decision to purchase the robots from an outside supplier.
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