LINK TO TEXT Based on the above assumptions, indicate whether the offer should b

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LINK TO TEXT

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

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 19,100 Tri-Robos is as follows:
Cost Direct materials ($51 per robot) $974,100 Direct labor ($41 per robot) 783,100 Variable overhead ($5 per robot) 95,500 Allocated fixed overhead ($31 per robot) 600,000     Total $2,452,700
Jobs is approached by Tienh Inc., which offers to make Tri-Robo for $117 per unit or $2,234,700.

Following are independent assumptions:

Explanation / Answer

1a) Calculate total cost :

b) The offer should be accepted

2a) Calculate total cost :

b) The offer should not be accepted

Make Buy Net income increase (decrease) Direct material 974100 974100 Direct labour 783100 783100 Variable overhead 95500 95500 Fixed overhead 600000 195000 405000 Purchase price 2234700 -2234700 Total 2452700 2429700 23000

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