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Use incremental analysis for make-or buy decision. E7.6 (LO 3), E Jobs, Inc. has recently started the manufacture of Tri-Robo, a three-wheeled robot that e
Use incremental analysis for make-or buy decision. E7.6 (LO 3), E Jobs, Inc. has recently started the manufacture of Tri-Robo, a three-wheeled robot that e for fires and gas leaks and then transmit this information to a smartphone. The cost can s structure to manufacture 20,000 Tri-Robos is as follows Exercises 7 Cost Direct materials ($50 per robot) Direct labor ($40 per robot) Variable overhead (S6 per robot) Allocated fixed overhead (S30 per robot) S1,000,000 800,000 120,000 600,000 $2,520,000 Total Jobs is approached by Tienh Inc., which offers to make Tri-Robo for $115 per unit or $2,300,000 Instructions a. Using incremental analysis, determine whether Jobs should accept this offer under each of the fol lowing independent assumptions. 1. Assume that $405,000 of the fixed overhead cost can be avoided. 2. 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 generat $375,000. e additional income of b. Describe the qualitative factors that might affect the decision to purchase the robots from an outside supplier
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