Help I System A Exercise 20-6 (Part Level Submission) Jobs, Inc. has recently st

Question

Help I System A 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 19,300 Tri-Robos is as follows. Direct materials ($51 per robot) Direct labor ($38 per robot) Variable overhead ($6 per robot) $984,300 733,400 115,800 Allocated fixed overhead ($31 per robot) 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. v (al) Your answer is partially correct. Try again. Assume that $405,000 of the fixed overhead cost can be avoided. (Enter negative amounts using either a nega preceding the number e.g. -45 or parentheses e.g. (45))

Explanation / Answer

Make Buy Net Income Increase (Decrease) a1) Direct materials 984300 0 984300 Direct labor 733400 0 733400 Variable overhead 115800 0 115800 Fixed overhead 600000 195000 405000 Opportunity cost 0 0 0 Purchase price 0 2219500 -2219500 TOTALS 2433500 2414500 19000 As the Net income increases by $19000 if the product is bought, the firm can buy the product. Make Buy Net Income Increase (Decrease) a2) Direct materials 984300 0 984300 Direct labor 733400 0 733400 Variable overhead 115800 0 115800 Fixed overhead 600000 600000 0 Opportunity cost 375000 0 375000 Purchase price 0 2219500 -2219500 TOTALS 2808500 2819500 -11000 As the Net income decreases by $11000 if the product is bought, the firm should make the product.

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