Exercise 7-6 Jobs, Inc. has recently started the manufacture of Tri-Robo, a thre

Question

Exercise 7-6 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 19,300 Tri-Robos is as follows: Direct materials ($51 per robot) Direct labor ($38 per robot) Variable overhead ($6 per robot) Allocated fixed overhead ($31 per robot) Cost $984,300 733,400 115,800 600,000 $2,433,500 Total Jobs is approached by Tienh Inc., which offers to make Tri-Robo for $115 per unit or $2,219,500. Following are independent assumptions

Explanation / Answer

1a) Decision making :

1b) The offer should be accepted.

2a) Decision making :

2b) The offer should not be accepted.

Make Buy Net income increase (decrease) Direct materials 984300 984300 Direct labour 733400 733400 Variable overhead 115800 115800 Fixed overhead 405000 405000 Purchase price 2219500 (2219500) Totals 2238500 2219500 19000

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