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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

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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 $796,000 636,800 Direct materials ($40 per robot) Direct labour ($32 per robot) Variable overhead ($8 per robot) Allocated fixed overhead ($20 per robot) 159,200 398,000 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 c.8. - 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.) Net Income Increase (Decrease) Make Buy $ (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.) Net Income Increase (Decrease) Make Buy $ $ $ Should the offer be accepted? . (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.3. -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) Net Income Increase (Decrease) Make Buy

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