Question
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
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 19,900 RecRobos is as follows: Direct materials ($45 per robot) Cost $895,500 Direct labour ($31 per robot) 616,900 Variable overhead ($8 per robot) 159,200 Allocated fixed overhead ($23 per robot) 457,700 Total $2,129,300 SY Telc is approached by Chen Inc., which offers to make RecRobo for $83 per unit or $1,651,700. Using incremental analysis, determine whether $Y Telc should accept this offer under each of the following independent assumptions: (1) Assume that $278,600 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).)
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