Chrome File Edit View History Bookmarks People Window Help 95% Sat 8:35 PM x Wil

ID: 2513735 • Letter: C

Question

Chrome File Edit View History Bookmarks People Window Help 95% Sat 8:35 PM x WileyPLUS xC Jobs, Inc. Has Recently Starte x CSecure https://edugen.wileyplus.com/edugen/student/mainfr.uni WileyPLUS: MyWlleyPLUSI HelRI Contact UsI Log Out WileyPLUS Weygandt, Financial & Managerial Accounting, 2e Financial and Managerial Accounting (ACCTG 10 and 11) MESSAGE MY INSTRUCTOR STANDARD VIEW PRINTER VERSION BACK 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 19,700 Tri-Robos is as follows. Direct materials ($52 per robot) Direct labor ($40 per robot) Variable overhead ($7 per robot) Allocated fixed overhead ($30 per robot) Cost $1,024,400 788,000 137,900 600,000 $2,550.300 Total Jobs is approached by Tienh Inc., which offers to make Tri-Robo for $119 per unit or $2,344,300 Following are independent assumptions. (a1) Assume that $405,000 of the fixed overhead cost can be avoided. (Enter negative amounts using either a negative sign preceding the number e.g.-15 or parentheses eg. (15).) Net Income Increase (Decrease) Make Buy Direct materials Direct labor Variable overhead Fixed overhead Purchase price Total annual cost Using incremental analysis, determine whether Jobs should accept this offer

Explanation / Answer

Answer

Make [given]

Buy

Net Income Increase (Decrease)

Direct Materials

$1024400

Direct Labor

$788000

variable Overhead

$137900

Fixed Overhead

$600000

[600000 - 405000] $195000

$405000

Purchase price

$2344300

$-2344300

Total Annual Cost

$2,550,300

$2,539,300

$11,000