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 21,100 Tri-Robos is as follows: Direct materials ($49 per robot) Direct labor ($40 per robot) Variable overhead ($7 per robot) Allocated fixed overhead ($28 per robot) Cost $1,033,900 844,000 147,700 600,000 $2,625,600 Total obs is approached by Tienh Inc, which offers to make Tri-Robo for $114 per unit or $2,405,400. Following are independent assumptions

Explanation / Answer

Ans)

1)

Yes, the offer should be accepted as the net income increases by 25,200

2)

1)

Make Buy Net Income Increase
(Decrease) Direct Materials $1033900 $0 $1033900 Direct Labor $844,000 $0 $844,000 Variable Overhead $147,700 $0 $147,700 Fixed Overhead $600,000 $195,000 $405,000 Purchase Price $0 $2,405,400 ($2,405,400) Total Annual Cost $2,625,600 $2,600,400 25,200

Yes, the offer should be accepted as the net income increases by 25,200

2)

Make Buy Net Income Increase
(Decrease) Direct Materials $1,033,900 $0 $1,033,900 Direct Labor $844,000 $0 $844,000 Variable Overhead $147,700 $0 $147,700 Fixed Overhead $600,000 $600,000 $0 Opportunity Cost $375,000 $0 $375,000 Purchase Price $0 $2,405,400 ($2,405,400) Total Annual Cost $3000600 $3005400 $4800 The offer should be rejected

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

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