Question 20 SY Telc 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 20,000 RecRobos is as follows: Direct materials ($37 per robot) Direct labour ($27 per robot) Variable overhead ($6 per robot) Allocated fixed overhead ($26 per robot) Total Cost $740,000 540,000 120,000 520,000 $1,920,000 SY Telc is approached by Chen Inc., which offers to make RecRobo for $71 per unit or $1,420,000. Using incremental analysis, determine whether SY Telc should accept this offer under each of the following independent assumptions: (1) Assume that $320,000 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).) 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 Chen Inc., SY Telc can use the released productive resources to generate additional income of $220,000. (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).) Net Income Increase (Decrease) Make Buy Should the offer be accepted