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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 19,300 Tri-Robos is as follows.
Cost | |||
Direct materials ($51 per robot) | $984,300 | ||
Direct labor ($38 per robot) | 733,400 | ||
Variable overhead ($6 per robot) | 115,800 | ||
Allocated fixed overhead ($31 per robot) | 600,000 | ||
Total | $2,433,500 |
Jobs is approached by Tienh Inc., which offers to make Tri-Robo for $115 per unit or $2,219,500. 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).) Net Income Increase (Decrease) Make Buy Direct materials Direct labor Variable overhead Fixed overhead Purchase price Total annual costStep by Step Solution
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