Wildhorse 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 ($41 per robot)		$820,000
Direct labour ($25 per robot)		500,000
Variable overhead ($5 per robot)		100,000
Allocated fixed overhead ($24 per robot)		480,000
Total		$1,900,000

Wildhorse is approached by Penny Worth Inc., which offers to make RecRobo for $72 per unit or $1,440,000. Using incremental analysis, determine whether Wildhorse should accept this offer under each of the following independent assumptions: (1) Assume that $320,000 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). While alternate approaches are possible, irrelevant fixed costs should be included in both options when solving this problem.)

		Make		Buy		Net Income Increase (Decrease)
select an item Direct materialsDirect labourVariable overheadFixed overheadPurchase priceTotal annual cost		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount
select an item Direct materialsDirect labourVariable overheadFixed overheadPurchase priceTotal annual cost		enter a dollar amount		enter a dollar amount		enter a dollar amount
select an item Direct materialsDirect labourVariable overheadFixed overheadPurchase priceTotal annual cost		enter a dollar amount		enter a dollar amount		enter a dollar amount
select an item Direct materialsDirect labourVariable overheadFixed overheadPurchase priceTotal annual cost		enter a dollar amount		enter a dollar amount		enter a dollar amount
select an item Direct materialsDirect labourVariable overheadFixed overheadPurchase priceTotal annual cost		enter a dollar amount		enter a dollar amount		enter a dollar amount
select a closing name Direct materialsDirect labourVariable overheadFixed overheadPurchase priceTotal annual cost		$enter a total amount		$enter a total amount		$enter a total amount

Should the offer be accepted?

select an option YesNo

(2) Assume that none of the fixed overhead is avoidable. However, if the robots are purchased from Penny Worth Inc., Wildhorse can use the released productive resources to generate additional income of $220,000. (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). While alternate approaches are possible, irrelevant fixed costs should be included in both options when solving this problem.)

		Make		Buy		Net Income Increase (Decrease)
select an item Direct materialsDirect labourVariable overheadFixed overheadPurchase priceTotal annual costOpportunity cost		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount
select an item Direct materialsDirect labourVariable overheadFixed overheadPurchase priceTotal annual costOpportunity cost		enter a dollar amount		enter a dollar amount		enter a dollar amount
select an item Direct materialsDirect labourVariable overheadFixed overheadPurchase priceTotal annual costOpportunity cost		enter a dollar amount		enter a dollar amount		enter a dollar amount
select an item Direct materialsDirect labourVariable overheadFixed overheadPurchase priceTotal annual costOpportunity cost		enter a dollar amount		enter a dollar amount		enter a dollar amount
select an item Direct materialsDirect labourVariable overheadFixed overheadPurchase priceTotal annual costOpportunity cost		enter a dollar amount		enter a dollar amount		enter a dollar amount
select an item Direct materialsDirect labourVariable overheadFixed overheadPurchase priceTotal annual costOpportunity cost		enter a dollar amount		enter a dollar amount		enter a dollar amount
select a closing name Direct materialsDirect labourVariable overheadFixed overheadPurchase priceTotal annual costOpportunity cost		$enter a total amount		$enter a total amount		$enter a total amount

Should the offer be accepted?

select an option YesNo

Wideclared to manufacture Rechere where that come for free and then transmis Wormation to ameone. The cost true to manufacture 20.000 testow Co $830.000 Director 541 perro Director 325 per Vrede Alocated and overhead 52 perro 500.000 100.000 450.000 $1.200.000 Widersproched by Pew Worth the offers to make chtofur 572 per star 5.440,000 Use cremental analysis, determine whether Withone should accept the offer under math of the Potoning independent 1) Assume that 320.000 of the redove cost is beamount reduces the income theater with preceding the numbers -15.000 pertheless. While alternate cheapers should be cuted into whethem) Increase Detra Shout the offered (2) Assume that none of the fored overhead is avoidable. However, the robots are purchased from Penny Worth Inc., Wildhorsecan use the released productive resources to generate additional income of $220,000. (an amount reduces the net income then enter with a negative receding the numbers 15.000 or renthesis (S.COL. While alternate orchestre poble, relevant and costs should be included in both options when solving the problem) Net Income Increase Decrease) Make Buy Should the after be accepted