QUESTION 1:

Blossom, 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 20,100 Tri-Robos is as follows. Cost Direct materials ($51 per robot) $1,025,100 Direct labor ($40 per robot) 804,000 Variable overhead ($6 per robot) 120,600 Allocated fixed overhead ($30 per robot) 603,000 Total $2,552,700 Blossom is approached by Tienh Inc., which offers to make Tri-Robo for $116 per unit or $2,331,600. Following are independent assumptions. (al) 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 Make Buy (Decrease) Direct materials $ $ $ Direct labor Variable overhead Fixed overhead Purchase price Total annual cost $ $ $ Using incremental analysis, determine whether Blossom should accept this offer. The offer v . (a2) Assume that none of the fixed overhead can be avoided. However, if the robots are purchased from Tienh Inc., Blossom can use the released productive resources to generate additional income of $375,000. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Net Income Increase Make Buy (Decrease) Direct materials $ $ $ Direct labor Variable overhead Fixed overhead Opportunity cost Purchase price Totals $ $ $ Based on the above assumptions, indicate whether the offer should be accepted or rejected? The offer v . Blossom Inc. produces three separate products from a common process costing $100,400. Each of the products can be sold at the split-off point or can be processed further and then sold for a higher price. Shown below are cost and selling price data for a recent period. Sales Value Cost to Sales Value at Split-Off Process after Further Point Further Processing Product 10 $60,300 $100,200 $190,700 Product 12 15,500 29,600 34,000 Product 14 54,100 149,900 215,200 (a) Determine total net income if all products are sold at the split-off point. Netincome $ (b). Determine total net income if all products are sold after further processing. Net income $ e Textbook and Media Save for Later Attempts: 0 of 2 used Submit Answer (c) Calculate incremental profit/(loss) and determine which products should be sold at the split-off point and which should be processed further. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Product Incremental profit (loss) Decision Product 10 $ Product 12 Product 14 $ V(d) Determine total net income using the results from previous part. Net income $ Is the net income different from that determined in part (b)? V , net income is V by $Ivanhoe Company purchases sails and produces sailboats. It currently produces 1,300 sailboats per year, operating at normal capacity, which is about 80% of full capacity. Ivanhoe purchases sails at $258 each, but the company is considering using the excess capacity to manufacture the sails instead. The manufacturing cost per sail would be $93 for direct materials, $83 for direct labor, and $90 for total manufacturing overhead. The $90 total manufacturing overhead includes $78,000 of annual fixed overhead that is allocated using normal capacity. The president of lvanhoe has come to you for advice. \"It would cost me $266 to make the sails;\" she says, \"but only $258 to buy them. Should | continue buying them, or have | missed something?\" (a) Prepare a per unit analysis of the differential costs. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Net Income Make Sails Buy Sails Increase (Decrease) Direct material % % % Direct labor Variable overhead Purchase price Total unit cost $ $ $ Should Ivanhoe make or buy the sails? Ivanhoe should v | the sails. eTextbook and Media Save for Later Attempts: 0 of 2 used (b) If Ivanhoe suddenly finds an opportunity to rent out the unused capacity of its factory for $77,600 per year, would your answer to part (a) change? v . Thisis because the net income will v by