WileyPLUS hoo.com-Yahoo Mall Ret Kimmel, Accounting, 6e Help I ignment ES Exerci

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WileyPLUS hoo.com-Yahoo Mall Ret Kimmel, Accounting, 6e Help I ignment ES Exercise 20-6 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 20,000 Tri-Robos is as follows. Cost $960,000 800,000 120,000 600,000 $2,480,000 Direct materials ($48 per robot) Direct labor ($40 per robot) Variable overhead ($6 per robot) Allocated fixed overhead ($30 per robot) Total Jobs is approached by Tienh Inc., which offers to make Tri-Robo for $113 per unit or $2,260,000. Following are independent assumptions. 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 45 or parentheses e.g. (45).) Net Income Increase (Decrease) Make Buy Direct materials s Direct labor

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1. Assume that $405000 of the fixed overhead can be avoided Make Buy Net Income-Increase/(Decrease) Direct Material 960000 960000 Direct Labor 800000 800000 Variable Overhead 120000 120000 Fixed Overhead 600000-405000 600000 195000 405000 Purchase Price 2260000 -2260000 Total Annual Cost 2480000 2455000 25000 Offer should be accepted since net income will be increased by 185000 2. Assume that None of the fixed overhead can be avoided Make Buy Net Income-Increase/(Decrease) Direct Material 960000 960000 Direct Labor 800000 800000 Variable Overhead 120000 120000 Fixed Overhead 600000 600000 0 Opportunity Cost 375000 375000 Purchase Price 2260000 -2260000 Total Annual Cost 2855000 2860000 -5000 Offer should be rejected since net income will be decreased by 185000

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