Jobs, Inc. has recently started the manufacture of Tri-Robo, a three-wheeled rob

Question

Jobs, 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 20,700 Tri-Robos is as follows: Direct materials ($49 per robot) Direct labor ($42 per robot) Variable overhead ($5 per robot) Allocated fixed overhead ($29 per robot) Cost $1,014,300 869,400 103,500 600,000 $2,587,200 Total Jobs is approached by Tenh Inc., which offers to make Tri-Robo for $115 per unit or $2,380,500 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).) Net Income Increase (Decrease) Make Buy Direct materials Direct labor Variable overhead Fixed overhead Purchase price Total annual cost Using incremental analysis, determine whether Jobs should accept this offer The offer (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. 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

Explanation / Answer

(a) Assume that $405000 of the fixed overhead cost can be avoided.

Net income Increase/(Decrease)

Using incremental analysis, determine whether jobs should acept this offer.

The offer Rejected

(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 generte additional income of $375,000

Net income Increase/ (Decrease)

Based on the above assumptions, indicate whether the offer should be accepted or rejeted?

The offer Accepted

Make Buy

Net income Increase/(Decrease)

Direct material 1014300 1014300 Direct labor 869400 869400 Variable overhead 103500 103500 Fixed overhead 600000 195000 405000 Purchase price 2380500 (2380500) Total annual cost 2587200 2575500 11700

Related Questions

Navigate

• Browse (All)
• Browse J
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.