Sunland, 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 19,700 Tri-Robos is as follows.

		Cost
Direct materials ($52 per robot)		$1,024,400
Direct labor ($40 per robot)		788,000
Variable overhead ($7 per robot)		137,900
Allocated fixed overhead ($30 per robot)		591,000
Total		$2,541,300

Sunland is approached by Tienh Inc., which offers to make Tri-Robo for $119 per unit or $2,344,300. 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 the difference between the two previous amounts in the row
Direct labor		enter a dollar amount		enter a dollar amount		enter the difference between the two previous amounts in the row
Variable overhead		enter a dollar amount		enter a dollar amount		enter the difference between the two previous amounts in the row
Fixed overhead		enter a dollar amount		enter a dollar amount		enter the difference between the two previous amounts in the row
Purchase price		enter a dollar amount		enter a dollar amount		enter the difference between the two previous amounts in the row
Total annual cost		$enter a total amount		$enter a total amount		$enter a total amount

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

The offer select whether the offer should be accepted or not should not be acceptedshould be accepted.

(a2) Assume that none of the fixed overhead can be avoided. However, if the robots are purchased from Tienh Inc., Jobs 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 (Decrease) Make Buy $ $ 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