Homework SourseJobs Inc has recently started the manufacture of TriRobo a t
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 20,200 Tri-Robos is as follows:
Jobs is approached by Tienh Inc., which offers to make Tri-Robo for $116 per unit or $2,343,200.
Following are independent assumptions:
| Cost | |||
| Direct materials ($48 per robot) | $969,600 | ||
| Direct labor ($42 per robot) | 848,400 | ||
| Variable overhead ($7 per robot) | 141,400 | ||
| Allocated fixed overhead ($30 per robot) | 600,000 | ||
| Total | $2,559,400 |
Jobs is approached by Tienh Inc., which offers to make Tri-Robo for $116 per unit or $2,343,200.
Following are independent assumptions:
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 20,200 Tri-Robos is as follows:
Jobs is approached by Tienh Inc., which offers to make Tri-Robo for $116 per unit or $2,343,200.
Following are independent assumptions:
| Cost | |||
| Direct materials ($48 per robot) | $969,600 | ||
| Direct labor ($42 per robot) | 848,400 | ||
| Variable overhead ($7 per robot) | 141,400 | ||
| Allocated fixed overhead ($30 per robot) | 600,000 | ||
| Total | $2,559,400 |
Jobs is approached by Tienh Inc., which offers to make Tri-Robo for $116 per unit or $2,343,200.
Following are independent assumptions:
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Solution
The incremental analysis is prepared as below:
The offer should be accepted as it results in an increase in net income by $21,200.
| Make (A) | Buy (B) | Increase/Decrease (A-B) | |
| Direct Materials | 969,600 | 969,600 | |
| Direct Labor | 848,400 | 848,400 | |
| Variable Overhead | 141,400 | 141,400 | |
| Fixed Overhead | 600,000 | 195,000 (600,000 - 405,000) | 405,000 |
| Purchase Price | 2,343,200 | -2,343,200 | |
| Total Annual Cost | $2,559,400 | $2,538,200 | $21,200 |
