Pharoah has recently started to manufacture RecRobo, a three-wheeled robot that can scan a home for fires and gas leaks and then transmit this information to a mobile phone. The cost structure to manufacture 19,900 RecRobos is as follows: Cost Direct materials ($40 per robot) $796,000 Direct labour ($32 per robot) 636,800 Variable overhead ($8 per robot) 159,200 Allocated fixed overhead ($20 per robot) 398,000 Total $1,990,000 Pharoah is approached by Foress Inc., which offers to make RecRobo for $76 per unit or $1,512,400. Using incremental analysis, determine whether Pharoah should accept this offer under each of the following independent assumptions: (1) Assume that $238,800 of the fixed overhead cost is avoidable. (If an amount reduces the net income then enter with a negative sign preceding the number e.g. -15,000 or parenthesis, e.g. (15,000). While alternate approaches are possible, irrelevant fixed costs should be included in both options when solving this problem.) Direct materials Direct labour Variable overhead Fixed overhead Purchase price Make Buy $ $ Total annual cost $ $ $ Should the offer be accepted? Net Income Increase (Decrease) (2) Assume that none of the fixed overhead is avoidable. However, if the robots are purchased from Foress Inc., Pharoah can use the released productive resources to generate additional income of $138,800. (If an amount reduces the net income then enter with a negative sign preceding the number e.g. -15,000 or parenthesis, e.g. (15,000). While alternate approaches are possible, irrelevant fixed costs should be included in both options when solving this problem.) Direct materials Direct labour Variable overhead Fixed overhead Purchase price Make $ Net Income Buy Increase (Decrease) $ Total annual cost Opportunity cost $ $ $ Should the offer be accepted