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Pharoah, 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
Pharoah, 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 19,500 Tri-Robos is as follows. Cost Direct materials ($48 per robot) $936,000 Direct labor ($39 per robot) 760,500 Variable overhead ($6 per robot) 117,000 Allocated fixed overhead ($31 per robot) 604,500 Total $2,418,000 Pharoah is approached by Tienh Inc., which offers to make Tri-Robo for $113 per unit or $2,203,500. Following are independent assumptions.
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