Exercise 20-6 (Part Level Submission) Jobs, Inc. has recently started the manufa
ID: 2576224 • Letter: E
Question
Exercise 20-6 (Part Level Submission) 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 19,000 Tri-Robos is as follows. Direct materials ($48 per robot) Direct labor ($38 per robot) Variable overhead ($5 per robot) Allocated fixed overhead ($32 per robot) Cost $912,000 722,000 95,000 600,000 $2,329,000 Total obs is approached by Tienh Inc., which offers to make Tri-Robo for $111 per unit or $2,109,000. Following are independent assumptions.Explanation / Answer
Make
Buy
Net Income
Direct Materials
48*19000 = 912000
Direct labor
38*19000 = 722000
Variable overhead
5*19000 = 95000
Fixed overhead
600000 – 405000 = 195000
Purchase price
111
Total Annual cost
1924000
111*19000 = 2109000
-185000
The offer should not be accepted.
Make
Buy
Net Income
Direct Materials
48*19000 = 912000
Direct labor
38*19000 = 722000
Variable overhead
5*19000 = 95000
Fixed overhead
600000 – 405000 = 195000
Purchase price
111
Total Annual cost
1924000
111*19000 = 2109000
-185000
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