Sandhill, 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 21,000 Tri-Robos is as follows. Direct materials ($49 per robot) Direct labor ($41 per robot) Cost $1,029,000 861,000 Variable overhead ($5 per robot) 105,000 Allocated fixed overhead ($29 per robot) 609,000 Total $2,604,000 Sandhill is approached by Tienh Inc., which offers to make Tri-Robo for $113 per unit or $2,373,000. Following are independent assumptions.