(SHOW YOUR WORK TO GET PART MARKS) 1. The Picture Company makes two picture frames: metal and wood. The current financial information is as follows: Units Sales Variable costs Fixed costs Net income Profit per unit Questions: Metal 5,000 $60,000 35,000 10,000 $15,000 $3.00 Wood 3,000 $25,000 7,500 10,000 $7,500 $2.50 =I 1) Assume there was unlimited demand for either of the products, which product should the Picture Company sell to earn the maximum net income. Prepare an incremental analysis for the make-or-buy decision. E7.21 (LO 3) 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: Cost Direct materials ($35 per robot) Direct labour ($30 per robot) Variable overhead ($10 per robot) Allocated fixed overhead ($25 per robot) Total $ 700,000 600,000 200,000 500,000 $2,000,000 SY Tele is approached by Chen Inc., which offers to make RecRobo for $80 per unit or $1.6 million. Instructions a. Using incremental analysis, determine whether SY Tele should accept this offer under each of the following independent assumptions: 1. Assume that $400,000 of the fixed overhead cost is avoidable. 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 $200,000. b. Describe the qualitative factors that might affect the decision to buy the robots from an outside supplier. (SHOW YOUR WORK TO GET PART MARKS) 1. The Picture Company makes two picture frames: metal and wood. The current financial information is as follows: Units Sales Variable costs Fixed costs Net income Profit per unit Questions: Metal 5,000 $60,000 35,000 10,000 $15,000 $3.00 Wood 3,000 $25,000 7,500 10,000 $7,500 $2.50 = I 1) Assume there was unlimited demand for either of the products, which product should the Picture Company sell to earn the maximum net income. 1. The Picture Company makes two picture frames: metal and wood. The current financial information is as follows: Units Sales Variable costs Fixed costs Net income Profit per unit Questions: Metal 5,000 $60,000 35,000 10,000 $15,000 $3.00 Wood 3,000 $25,000 7,500 10,000 $7,500 $2.50 =I 1) Assume there was unlimited demand for either of the products, which product should the Picture Company sell to earn the maximum net income