Kimmel, Accounting, e Help I System Announcements Exercise 20-6 (Part Level Subm

ID: 2508948 • Letter: K

Question

Kimmel, Accounting, e Help I System Announcements Exercise 20-6 (Part Level Submission) Jobs, Inc. has recently started the manufacture of Tri-Robo, smartphone. The cost structure to manufacture 19,400 Tri-Robos is as follows. a three-wheeled robot that can scan a home for fires and gas leaks and then transmit this information to a Direct materials ($49 per robot) Direct labor ($37 per robot) Variable overhead ($6 per robot) Allocated fixed overhead ($31 per robot) Cost $950,600 717,800 116,400 600,000 $2,384,800 Total obs is approached by Tienh Inc., which offers to make Tri-Robo for $112 per unit or $2,172,800. (a1) Assume that $405,000 of the fixed overhead cost can be avoided. (Enter negative amounts parenth…e.g. (45).) using either a negative sign preceding the number e.g. -45 or Net Income Make Direct materials Direct labor 2

Explanation / Answer

Make

Buy

Net Income Increase (Decrease)

Direct materials

950,600

Direct labor

717,800

Variable overhead

116,400

Fixed overhead

600,000

195,000

405,000

Purchase price

2,172,800

-2,172,800

Total annual cost

2,384,800

2,367,800

17,000

2) Should accept the offer

Working: Make cost is more thus buy it from outside