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 19,900 Tri-Robos is as follows.

		Cost
Direct materials ($49 per robot)		$975,100
Direct labor ($39 per robot)		776,100
Variable overhead ($6 per robot)		119,400
Allocated fixed overhead ($30 per robot)		597,000
Total		$2,467,600

Sandhill is approached by Tienh Inc., which offers to make Tri-Robo for $113 per unit or $2,248,700. Following are independent assumptions.

(a1)

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).)

		Make		Buy		Net Income Increase (Decrease)
Direct materials		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount
Direct labor		enter a dollar amount		enter a dollar amount		enter a dollar amount
Variable overhead		enter a dollar amount		enter a dollar amount		enter a dollar amount
Fixed overhead		enter a dollar amount		enter a dollar amount		enter a dollar amount
Purchase price		enter a dollar amount		enter a dollar amount		enter a dollar amount
Total annual cost		$enter a total amount		$enter a total amount		$enter a total amount

Using incremental analysis, determine whether Sandhill should accept this offer.

The offer select an option should not be acceptedshould be accepted.

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